Stocks Reach New Heights Amid Market Optimism
The S&P 500 Index ($SPX) (SPY) is up +0.45%, with the Dow Jones Industrials Index ($DOWI) (DIA) increasing by +0.38%, and the Nasdaq 100 Index ($IUXX) (QQQ) climbing +0.70% today.
Market Trends and Influences
Today, stocks are moderately higher, highlighted by the S&P 500 hitting a new all-time high. This uptick follows a notable drop in bond yields, with the 10-year T-note yield falling to its lowest point in a month, aided by declines in European government bond yields and reduced US inflation expectations. Chip stocks are also showing strength, as Bloomberg reports potential easing on US technology sales restrictions to China, which may prevent some of the previously discussed stricter measures. Notably, the NYSE will close early at 1:00 PM EST due to a holiday schedule.
This month has seen robust buying activity, pushing the S&P 500, Dow Jones Industrials, and Nasdaq 100 to record highs. In fact, investors have poured $141 billion into US equities, marking the largest inflow for a four-week period to date, according to data from EPFR Global.
The markets are currently pricing in a 66% probability of a -25 basis point rate cut at the Federal Open Market Committee (FOMC) meeting scheduled for December 17-18.
Global Stock Market Overview
Overseas, stock markets are showing mixed results today. The Euro Stoxx 50 is up +0.49%, while China’s Shanghai Composite Index closed up by +0.93%. In contrast, Japan’s Nikkei Stock 225 ended the day down -0.37%.
Interest Rates and Bond Markets
In the bond market, December 10-year T-notes (ZNZ24) have gained +8 ticks, with the yield dipping -5.2 basis points to 4.211%. Today’s T-notes reached a one-month high, with the 10-year yield hitting a low of 4.194%. Increased buying can be attributed to a rally in European government bonds and an overall decrease in inflation expectations, as evidenced by the 10-year breakeven inflation rate, now at a low of 2.247%.
European government bond yields have also decreased, with the 10-year German bund yield falling to a low of 2.090% and down -2.1 basis points to 2.106%. Meanwhile, the 10-year UK gilt yield dropped to a one-month low of 4.219%, down -1.6 basis points.
European Economic Update
The Eurozone’s November Consumer Price Index (CPI) increased by +2.3% year-over-year, aligning with expectations. However, the core CPI rose by +2.7% year-over-year, falling short of the anticipated +2.8% increase. Notably, the European Central Bank’s (ECB) October one-year inflation expectations unexpectedly rose to +2.5% from +2.4% in September, contrary to forecasts of a decline.
In Germany, retail sales for October experienced a drop of -1.5% month-over-month, significantly lower than the expected -0.5% and marking the largest decline in two years. Additionally, German unemployment figures showed an increase of +7,000 in November, indicating a stronger labor market than the expected +20,000. The unemployment rate remained steady at 6.1%, matching forecasts.
ECB Vice President Guindos commented, “Inflation in Europe is going quite well. The data are positive, although news on the Eurozone economy is less good.”
ECB Governing Council member Stournaras hinted at a possible aggressive reduction in interest rates if US tariffs negatively impact the European economy. Swaps indicate a 100% likelihood of a -25 basis point cut at the ECB’s December 12 meeting, with a 14% chance of a -50 basis point cut.
US Stock Movers
In the US, chip stocks are rallying, with Bloomberg’s report on softened US restrictions increasing sentiment in the sector. Lam Research (LRCX) has surged over +5%, leading the gains in the S&P 500 and Nasdaq 100. Other gainers include KLA Corp (KLAC) up more than +4%, and Applied Materials (AMAT), ASML Holding NV (ASML), and Marvell Technology (MRVL) rising over +3%. Additionally, Nvidia (NVDA) has climbed more than +2% in the Dow Jones Industrials. ARM Holdings Plc (ARM), Microchip Technology (MCHP), and Qualcomm (QCOM) are also experiencing increases of over +2%.
Boeing (BA) shares rose more than +2% after BOA Aviation placed an order for 14 Boeing 737-8 aircraft.
Voyager Therapeutics (VYGR) has seen substantial gains, up more than +19% after Wedbush initiated coverage with an outperform recommendation and a target price of $11.
SentinelOne (S) rose more than +1% after JPMorgan Chase lifted its price target to $33 from $30. Zscaler (ZS) increased +0.62% following a price target adjustment from JPMorgan Chase to $240 from $220.
On the downside, MercadoLibre (MELI) is down more than -3% as Brazil’s Finance Minister announced a plan to cut 70 billion reals ($11.8 billion) from public spending through 2026. Workday (WDAY) shares fell over -1%, adding to Wednesday’s -6% decline due to a lowered revenue forecast. Fifth Third Bancorp (FITB) is down more than -1% following a federal judge’s ruling allowing a class-action lawsuit regarding improper deposit account fees to proceed.
Corteva (CTVA) is down nearly -1% amid indications of insider selling, notably after an SEC filing revealed the sale of $2.39 million in shares. Microsoft (MSFT) decreased -0.17% following the initiation of an antitrust investigation by the US Federal Trade Commission.
Earnings Reports (11/29/2024)
Companies reporting earnings include Cleanspark Inc (CLSK), iLearningEngines Holdings Inc (AILE), Ingles Markets Inc (IMKTA), Nordic American Tankers Ltd (NAT), Patterson Cos Inc (PDCO), Renovaro Inc (RENB), and Zuora Inc (ZUO).
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 are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
