US Stocks Rise as S&P 500 Hits Record High

The S&P 500 Index ($SPX) (SPY) has risen by +0.14%, while the Dow Jones Industrials Index ($DOWI) (DIA) has dropped by -0.27%. In contrast, the Nasdaq 100 Index ($IUXX) (QQQ) is up by +0.81%.

Economic News Boosts Market Sentiment

Overall, stocks are trending upward today. The S&P 500 reached a new all-time high and the Nasdaq 100 recorded its best performance in two and a half weeks. Positive economic news—specifically for the ISM manufacturing index for November and construction spending for October—has helped improve predictions for a soft landing of the economy, leading to increased stock prices.

Mixed Corporate News Influences Stock Performance

The news from the corporate sector has presented a mixed picture. Super Micro Computer has surged more than +21%, leading gains in both the S&P 500 and Nasdaq, following a special committee’s report that found no misconduct by its management or board. Tesla shares are up over +3% after Roth Capital Partners upgraded its rating to “buy” from “neutral.” Conversely, Stellantis NV’s stock is down more than -6% after reports of CEO Tavares stepping down unexpectedly. Additionally, Upstart Holdings has declined over -12% following a downgrade by JPMorgan Chase from “neutral” to “underweight.”

Manufacturing and Construction Update

The ISM manufacturing index for November has increased by +1.9 to 48.4, better than the anticipated 47.5. Meanwhile, construction spending for October climbed by +0.4% month-over-month, exceeding expectations of +0.2%.

Upcoming Economic Indicators

Investors are keenly awaiting Wednesday’s release of the ISM services index, projected to dip by -0.5 to 55.5. Federal Reserve Chair Powell is also scheduled to speak at an event in New York. Furthermore, Friday will bring reports on November’s nonfarm payrolls, which are expected to show an increase of +200,000, and average hourly earnings, predicted to ease to +3.9% year-over-year from +4.0% in October.

Rate Cut Expectations Grow

Market expectations indicate a 65% chance of a -25 basis point rate cut at the Federal Open Market Committee (FOMC) meeting on December 17-18.

International Markets Show Positive Momentum

Internationally, stock markets are mostly up today. The Euro Stoxx 50 has reached a three-week high, advancing by +0.25%. In China, the Shanghai Composite Index has climbed to a one-week high with an increase of +1.13%. Japan’s Nikkei Stock 225 has also closed up by +0.80%.

Interest Rates Decline Amid Bond Market Response

March 10-year T-notes (ZNH25) have fallen by -10 ticks today, with the 10-year T-note yield rising by +5.6 basis points to 4.225%. Increased corporate supply, with approximately $25 billion in corporate debt offerings anticipated this week, has put pressure on T-notes as bond dealers hedge against the new supply. T-notes are also closely following Japanese bond trends amid hawkish remarks from BOJ Governor Ueda, who indicated that interest rate hikes are approaching.

European Bond Market Trends

In Europe, government bond yields are moving lower, with the 10-year German bund yield dropping to a two-month low of 2.034%, down -4.4 basis points. The 10-year UK gilt yield has also fallen to a one-month low of 4.211%, decreasing by -0.8 basis points.

ECB Awaits Decision on Rate Cuts

ECB Governing Council Member Kazaks has indicated that the ECB is likely to consider interest rate cuts at its upcoming meeting, with discussions underway regarding a more substantial move.

Swaps are currently pricing in a 100% chance of a -25 basis point cut at the ECB meeting on December 12, and an 18% chance for a larger -50 basis point cut.

Key Stock Movers Today

Super Micro Computer (SMCI) has soared more than +21% as it leads the S&P 500 and Nasdaq. Tesla (TSLA) has increased more than +3% following a buy rating upgrade by Roth Capital Partners, now targeting a price of $380.

Cruise line stocks are also rebounding after Truist Securities raised their price targets, indicating improved expectations for 2025 bookings. Norwegian Cruise Line Holdings (NCLH) has risen over +4%, while Carnival (CCL) is up more than +2%. Both Royal Caribbean Cruises (RCL) and Viking Holdings (VIK) have gained over +1% as well.

The Gap (GAP) has increased more than +6% after a JPMorgan Chase upgrade to “overweight,” targeting a price of $30. Cloudflare (NET) is up over +8% following a positive rating change by Morgan Stanley, now at $130, while NextEra Energy Partners (NEP) has also climbed more than +9% after a double upgrade from underweight to overweight, with a price target set at $22. Additionally, Akamai Technologies (AKAM) is up more than +4% due to an upgrade to outperform from Oppenheimer & Co., with a target of $120. Commercial Metals (CMC) has increased more than +2% after Goldman Sachs reinstated coverage with a buy recommendation at $75.

Marvell Technology (MRVL) is up over +2% following news of an expanded partnership with Amazon Web Services.

Meanwhile, PG&E (PCG) is down more than -5% after announcing an offering of $1.2 billion in convertible preferred stock, leading losses in the S&P 500. Stellantis NV (STLA) has dropped more than -6% due to news about CEO Tavares’s abrupt departure. Upstart Holdings (UPST) continues its decline, down over -12%, after being downgraded by JPMorgan Chase with a new price target of $57. NU Holdings (NU) has also dropped more than -5% after Citigroup recommended selling the stock with a price target of $11.

Stocks for SentinelOne (S) are down over -2% after a downgrade from Morgan Stanley. LendingClub (LC) fell more than -6% following a downgrade, and Toast Inc (TOST) has lost more than -2% after Goldman Sachs also downgraded its recommendation.

Earnings Reports Coming Up

For December 2, 2024, upcoming earnings reports include Compass Minerals International (CMP), Credo Technology Group Holding (CRDO), Mondee Holdings Inc (MOND), NANO Nuclear Energy Inc (NNE), and Zscaler Inc (ZS).

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.