Market Update: Stocks Remain Mixed Amid Economic Signals

The S&P 500 Index ($SPX) (SPY) is down -0.27%, while the Dow Jones Industrials Index ($DOWI) (DIA) sees a slight rise of +0.19%. The Nasdaq 100 Index ($IUXX) (QQQ) is down -0.66% today.

Market Weakness Driven by Tech Declines

Today’s trading shows many stocks declining. Alphabet’s stock fell by -4%, following antitrust news that Google may need to divest its Chrome browser due to concerns over market dominance. Nvidia’s shares dropped more than -1%, influenced by CEO Jensen Huang’s comments about the cost pressures of their new Blackwell AI chips despite the company reporting better-than-expected Q3 earnings. Additionally, fears of escalating tensions in the Ukraine-Russia conflict are adding pressure on the market after Ukraine reported a missile launch against the city of Dnipro by Russia.

Software and Cryptocurrency Stocks Shine

On a positive note, software companies are experiencing gains, highlighted by Snowflake’s stock soaring over +30% after the company announced Q3 revenue that exceeded expectations and raised its annual revenue forecast. Furthermore, cryptocurrency stocks are surging today as Bitcoin reaches a new high above $98,000, spurred by optimism surrounding supportive regulatory changes expected under President-elect Trump’s team. They are considering a dedicated White House position for digital asset policy.

Strong Economic Indicators Support Market Outlook

New York Fed President John Williams provided a supportive outlook for the stock market by noting that US economic growth remains solid and that the disinflationary process is on track. He mentioned that the labor market cooling and lower inflation suggest that current monetary policy is restrictive, hinting at potential interest rate cuts to more neutral levels in the future.

Among the 90% of S&P 500 companies that have reported Q3 earnings, 75% have surpassed estimates, slightly below the three-year average. Bloomberg Intelligence indicates that S&P 500 firms recorded an average year-over-year earnings increase of +8.5% in Q3, more than double the preseason predictions. The market is currently pricing in a 56% likelihood of a -25 basis point rate cut during the upcoming FOMC meeting on December 17-18.

Global Market Overview Shows Mixed Performance

International markets are showing mixed results today. The Euro Stoxx 50 increased by +0.11%, while China’s Shanghai Composite Index closed up +0.07%. In contrast, Japan’s Nikkei Stock 225 Index registered a decline, falling -0.85% to a three-week low.

Interest Rates and Economic Indicators

The December 10-year Treasury notes (ZNZ24) rose by +3 ticks today, causing the 10-year T-note yield to decrease by -2.2 basis points to 4.388%. The increase in T-notes resulted from a positive influence from European government bonds and a flight to safety amid geopolitical tensions. Fed President Williams’ dovish comments further supported T-note gains, although recent data showing a drop in US jobless claims limited these improvements, indicating labor market strength that could lead to a more hawkish Fed stance.

In Europe, bond yields have fallen as well. The 10-year German bund yield decreased by -2.2 basis points to 2.329%, while the 10-year UK gilt yield dropped by -1.9 basis points to 4.450%. In positive news, Eurozone new car registrations for October rose by +1.1% year-over-year, totaling 866,000 units—the largest increase in four months. Commenting on the current inflation and economic situation, ECB Governing Council member Stournaras suggested that rate cuts should continue until reaching what is termed the neutral rate, estimated at around 2%.

Swaps now predict a 100% chance of a -25 basis point rate cut by the ECB at its December 12 policy meeting, with a 19% likelihood of a more significant -50 basis point cut.

Key Movements in US Stocks

Software stocks are notably rising, led by Snowflake (SNOW), which surged by +30% after reporting a Q3 revenue of $942.1 million, surpassing the consensus of $898.6 million, and projecting full-year revenue of $3.43 billion, an increase from the previous estimate of $3.36 billion. MongoDB (MDB) is up over +11%, leading the Nasdaq 100’s gainers. Datadog (DDOG) and Cloudflare (NET) also rose by more than +4%.

MicroStrategy (MSTR), which holds the largest Bitcoin reserves among public companies, increased by more than +10% after announcing a nearly 50% rise in planned sales of convertible senior notes, now totaling $2.6 billion to acquire more Bitcoin.

Dream Finders Homes (DFH) jumped over +15% after S&P Dow Jones Indices confirmed the company will replace Haynes International in the SmallCap 600 index on November 25. Amentum Holdings (AMTM) rose by over +5% after Raymond James initiated coverage with an outperform rating and a price target of $30.

Deere & Co (DE) is up more than +5% following a reported Q4 net income of $1.25 billion, exceeding expectations of $1.06 billion. ON Holding AG (ONON) increased by over +1% after a Raymond James upgrade to strong buy with a price target of $63. GE Vernova (GEV) rose by more than +1% after Wells Fargo Securities initiated coverage with an overweight recommendation and a price target of $385.

On the downside, Alphabet (GOOGL) leads decliners in the S&P 500 with a drop of over -4% after the court filing about the Chrome divestment. Warner Music Group (WMG) fell more than -8% after reporting a Q4 operating margin of 8.8%, which was significantly below the expected 14.3%.

Palo Alto Networks (PANW) dropped by over -1% after its Q1 revenue of $2.10 billion came in shy of the $2.12 billion consensus estimate. ZIM Integrated Shipping Services Ltd (ZIM) declined by over -12% after Fearnley Securities downgraded its stock to sell, lowering the price target to $20.

Earnings Reports (11/21/2024)

BJ’s Wholesale Club Holdings Inc (BJ), Copart Inc (CPRT), Deere & Co (DE), Elastic NV (ESTC), Gap Inc/The (GAP), Intuit Inc (INTU), NetApp Inc (NTAP), Ross Stores Inc (ROST), UGI Corp (UGI), Vestis Corp (VSTS).

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.