The S&P 500 cut losses Wednesday, led by a turnaround in tech as investors continued to buy the dip in growth sectors of the market.
The S&P 500 rose 0.2%, but had been down nearly 1% intraday. The Dow Jones Industrial Average was flat, the Nasdaq gained 0.4%. Tech turned positive to help the broader market cut losses after starting the session on the backfoot as a slew of positive economic data and signs of persistently elevated inflation stoked concerns about sooner monetary policy action from the Federal Reserve. The Personal Consumption Expenditures price index, the Fed’s preferred inflation measure, was up 0.6% on October, below the 0.7% rate expected, but ahead of prior’s month 0.4%. That took the annualized rate for October to 5%, well above the Fed’s 2% target. The labor market continues to show progress toward the Fed’s maximum employment goal as jobless claims fell to lowest level since 1969. The Department of Labor reported Wednesday that 199,000 people filed for unemployment insurance, down 71,000 from the prior week's upwardly revised 271,000. That was well below consensus for claims to fall to 260,000. Economists, however, shrugged off the huge drop in claims as a one-off, which “were pushed down by a seasonal adjustment quirk,” Pantheon Macroeconomics said. “It will substantially reverse next week, with claims rebounding to about 250K.” Energy stocks added to recent gains even as oil prices gave up gains. Devon Energy (NYSE:DVN), Diamondback Energy (NASDAQ:FANG), Marathon Oil (NYSE:MRO) were among the biggest gainers. Tesla (NASDAQ:TSLA), meanwhile, moved off session lows to helped consumer discretionary stocks pare losses following a retail-led slide. Gap (NYSE:GPS) plunged 25% after the retailer slashed its full-year outlook following third-quarter results that fell short of Wall Street estimates as rising costs and supplier chain woes weighed. Nordstrom (NYSE:JWN) also reported weaker-than-expected quarterly results as rising labor costs dented profit, sending its share price 29% lower. On the monetary policy front, the minutes of the Fed's November meeting showed that some Federal Reserve policymakers were in favor of a faster pace of bond tapering to provide the central bank with plenty of room to hike rates amid concerns about inflation pressures. In another sign that Fed members are growing concerned about inflation, San Francisco Federal Reserve Bank President Mary Daly said Wednesday that she would be open to speeding up the pace of the Fed's bond tapering if inflation remained elevated and jobs growth remained strong.
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The United States Office of the Comptroller of the Currency has clarified that banks must obtain written permission from authorities before engaging in certain cryptocurrency activities.
India is to propose the creation of official digital currency by RBI. India is considering prohibiting all private cryptocurrencies. White House: Biden will make available up to 50 million BBL's of oil from the US strategic petroleum reserve. BoE's Haskel: Before interest rates are raised, we need to see clear evidence of both an increase in the size of the economy and an increase in the strength of the labour market. The S&P 500 cut losses Tuesday, as cyclical sectors rallied and tech eased off session lows on dip-buying activity, though rising U.S. Treasury yields weighed on sentiment on the sector.
The S&P 500 fell 0.36%, the Dow Jones Industrial Average gained 0.20%, or 70 points, the Nasdaq, which fell more than 1%, was down about 0.6%. Tech and communications services – growth sectors of the market that tend to include stocks with higher valuation – fell out of favor as rising U.S. Treasury yields weighed on sentiment. The selloff in tech has been driven by the “re-steepening in the yield curve as the spread between the 2-year and the 10-year Treasury yields moved back to 105 basis points in a relatively short order,” Mark Luschini, chief investment officer at Janney Montgomery Scott, told Investing.com in an interview on Tuesday. Crowdstrike (NASDAQ:CRWD), DocuSign (NASDAQ:DOCU), Peloton Interactive (NASDAQ:PTON), Zoom Video Communications (NASDAQ:ZM), were some of the hardest hit growth names, with the latter also pressured by concerns about future growth. Zoom Video Communications (NASDAQ:ZM) fell more than 15% after warning of a slowdown in revenue growth as the pandemic-fueled boost to user growth is expected to slow as employees return to the office. “While we're positive on Zoom's strategic initiatives and investments in key growth areas, we find it tougher to like a stock with more sharply decelerating growth and incremental pressure on profitability,” Deutsche Bank said in a note as it slashed its price target on the Zoom to $280 from $350. Big tech including – Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) – was also caught up in the rising rate storm, but are expected to be bought on the dip. “[W]hen somewhat frothy expectations build valuations up to the point where names that are among the leadership in tech are increasingly vulnerable to a pullback in their share price, [investors] should use those opportunities to add to positions if they're underweight or have established positions,” Luschini added. Consumer discretionary also weighed on the broader market, paced by a 12% slump in Best Buy (NYSE:BBY) after the electronics retailer’s weaker-than-expected holiday comparable sales offset third-quarter results that beat on both the top and bottom lines. Cyclical concerns of the market including financials, energy and industrials racked gains amid a rotation from value to growth. Energy jumped more than 3% as oil prices rallied despite President Joe Biden saying Tuesday the U.S. will release 50 million barrels of oil from its Strategic Petroleum Reserve in tandem with other major oil consuming countries to curb rising energy prices. “It will take time, but before long, you should see the price of gas fall where you fill up your tank,” Biden said on Tuesday. On Monday, OPEC said it would reassess its plan to slow production cuts if major oil consuming countries move ahead with plans to tap emergency oil reserves. US Treasury Secretary Yellen: I believe the US economy is currently experiencing a strong growth surge.
The United States is preparing to release oil from its reserves with other countries. OPEC+ may adjust plans if state oil stocks released - Delegates. White House: Biden intends to nominate Fed's Powell for a second term as Fed Chair, with Fed's Brainard as Vice Chair. - DXY Strengthened, S&P 500 Strengthened. The S&P 500 give up gains to close lower Monday, led by selloff in tech as investors maintained bets on earlier rate hikes following news that Federal Reserve Chairman Jerome Powell would be nominated for another term.
The S&P 500 fell 0.32%, and had earlier hit an intraday record of 4,743.74, the Dow Jones Industrial Average was up 0.1%, or 17 points, the Nasdaq fell 1.26%. President Joe Biden nominated Jerome Powell for a second four-year term as U.S. Federal Reserve Chair and nominated Governor Lael Brainard to vice chair. Treasury yields jumped on the news, suggesting that some had been betting on Brainard, who leans more dovish, which would likely have led to a lower for longer approach on monetary policy. The United States 10-Year surged above 1.6%, helping to stoke a bid on banking stocks. Energy stocks, meanwhile, followed oil prices higher after OPEC+ warned it would reconsider plans at its meeting next week to increase production cuts should countries tap their strategic energy reserves. The threat from OPEC comes just as reports suggested the U.S. is considering the release of oil from the Strategic Petroleum Reserve in tandem with other countries including Japan. Tech, which was the standout performer last week, underperformed as the rising yields soured sentiment on the sector. Excluding Apple (NASDAQ:AAPL) big tech including Meta, formerly Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), and Microsoft (NASDAQ:MSFT) ended in the red. On the economic front, housing activity remained buoyant as existing home sales in October rose by more than 0.8%. This "doesn't seem like a big increase, but it comes on the back of a 7% monthly gain in September and most forecasters were looking for some payback," Jefferies said. The late selloff on Wall Street comes as some forecast headwinds in the coming weeks for stocks, which have advanced into overbought territory, though that is unlikely to hamper a seasonal rally into year end. “Year-end seasonality typically favors stocks into Dec. 31, although we could experience some choppiness along the way due to overbought conditions,” Janney Montgomery Scott said in a note. In other automotive news, Tesla (NASDAQ:TSLA) increased 1% after CEO Elon Musk said in tweet that the company would "probably" launch its Model S Plaid electric sedan in China early next spring. In health care, meanwhile, vaccine makers BioNTech SE (NASDAQ:BNTX), and Moderna Inc (NASDAQ:MRNA) were in the ascendency with latter up more than 7% after receiving final clearance for their booster shots from the Food and Drug Administration on Friday. General Motors (NYSE:GM), meanwhile, was up more than 2% after CNBC reported the automaker acquired a 25% stake in the Seattle-based boating start-up Pure Watercraft. WH Press Sec. Psaki: OPEC should meet current demand and secure enough supply.
Fed's Clarida: It may be acceptable to explore speeding taper at the December meeting. (DXY strengthened, S&P 500 and Gold weakened) Fed's Waller: On employment increases and inflation, I favour a faster taper. Fed's Waller: The increase in inflation expectations is extremely concerning. China's foreign exchange self-discipline system suggests reducing the number of banks' foreign exchange proprietary trading accounts - sources. The Nasdaq eased from record highs Friday, but remained supported as investors piled into growth corners of the market like tech amid concerns about global growth following fresh lockdowns in Europe.
The S&P 500 fell 0.08%, the Dow Jones Industrial Average slipped 0.73%, or 261 points, the Nasdaq gained 0.44% after hitting an intraday record of 16,121.1. Austria said it would reimpose a nationwide lockdown on Monday to curb surging Covid-19 cases, raising concerns about the impact on the global economy as larger economies in the bloc including Germany could also introduce fresh restrictions. “[S]uddenly markets are paying attention [to raising Covid-19 cases in Europe] perhaps because policy responses are beginning to emerge,” Scotiabank Economics said. Against the backdrop of rising doubts about a possible slowdown in the global economy, investors piled into growth sectors like tech. Meta, formerly Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) traded higher. Semiconductor stocks also supported the broader tech sector as a surge in Micron Technology (NASDAQ:MU) offset weakness in Applied Materials. Applied Materials (NASDAQ:AMAT) reported third-quarter results and fourth-quarter guidance that fell short of estimates as supply shortages continue to weigh on growth. Its shares fell more than 4%. The gains in consumer discretionary stocks, one of the best performing sectors this week, continued, with Nike (NYSE:NKE) and Tesla (NASDAQ:TSLA) up more than 2%. Investor jitters over a slowdown in the global recovery dragged cyclical stocks lower, with energy and financials taking on the brunt of the selling pressure. Energy fell more than 3% and is on track for second-weekly losses as oil prices fell below $80 a barrel on concerns fresh restrictions in Europe will dent oil demand. Devon Energy (NYSE:DVN), Hess (NYSE:HES), Baker Hughes (NYSE:BKR) all fell more than 5% and led the selloff in the energy sector. Travel-related stocks including United Airlines (NASDAQ:UAL), Carnival (NYSE:CCL) and Airbnb (NASDAQ:ABNB) were under pressure as investors eased bets on the reopening trade. In health care, meanwhile, Moderna (NASDAQ:MRNA) was the standout performer, racking up a 6% gain after the Food and Drug Administration authorized Covid vaccine booster shots for all U.S. adults. Pfizer’s vaccine also received approval. On the political front, the House of Representatives passed President Biden’s $1.75 trillion "human infrastructure" package, or Build Back Better Act. The legislative measure will progress to the Senate, where Democrats hope to pass it using the budget reconciliation process, without Republican support. The bill will likely have to be revised as centrists such as Sen. Joe Manchin of West Virginia have balked at its hefty price tag, and "question claims the initiative was fully paid for,” Stifel said. “The bill would contribute $791B to the deficit in the next five years and $367B to the deficit over the coming 10 year period,” Stifel added, citing findings from the Congressional Budget Office. Asia Pacific stocks were mostly up on Friday morning after U.S. shares closed at a record high during the previous session. However, cautious over Chinese shares listed in the U.S. capped gains.
Japan’s Nikkei 225 were up 0.44% by 9:04 PM ET (2:04 AM GMT). Data released earlier in the day said that the national consumer price index (CPI) and national core CPI both grew 0.1% year-on-year in October. South Korea’s KOSPI was up 0.39% while in Australia, the ASX 200 inched down 0.03%. Hong Kong’s Hang Seng index slid 1.35%. China’s Shanghai Composite edged up 0.15% and the Shenzhen Component was up 0.21%. Chinese shares listed in the U.S. fell after e-commerce firm Alibaba (NYSE:BABA) Group Holding Ltd. (HK:9988) slashed its outlook for fiscal 2022 revenue, citing intensifying competition, dwindling consumer spending, and regulatory curbs. Video-streaming platform operator Bilibili (NASDAQ:BILI) Inc. (HK:9626) also saw its shares fall. Moves in U.S. Treasuries were minimal. However, the latest Treasury bill auctions indicated that investors are starting to demand more yield to hold the shortest-maturity debt as the debate on whether to lift or suspend the U.S. debt ceiling returns. Global shares remain near record levels, as corporate earnings were strong in the U.S. particularly. The strong growth also continues to ease concerns about inflation, monetary policy tightening, and an economic recovery from COVID-19 that is slowing down in China. “You can come up with a very strong list of reasons why you shouldn’t be invested,” Citi Private Bank regional head of investments for North America Kristen Bitterly told Bloomberg. “The best way to combat that is really with the record-high profitability that we’ve seen and to recognize that not all parts of the market are created equal.” The next six months could also see the S&P 500 hitting 5,200, an advance of about 11%, from current levels, in an environment of reduced monetary stimulus and outperformance by cyclical companies, according to UBS Global Wealth Management Chief Investment Officer Mark Haefele. Fed Vice Chairman Richard Clarida and Fed Bank of San Francisco President Mary Daly will also speak at the Asia Economic Policy Conference later in the day. Meanwhile, the U.S. House of Representatives will vote on President Joe Biden’s economic plan, valued at around $2 trillion. The bill must also pass through the Senate, where the outcome is less certain. Paypal: We enabled bitcoin payments in the checkout process for millions of Paypal merchants - Tweet.
CBO: We estimate that enacting this title would result in a net increase in the deficit totaling $281.5 billion over the 2022-2031 period. WH Press Sec. Psaki: The US has discussed a possible joint release of oil from reserves with China and other countries. Fed's Evans: Rate hikes could begin in 2022. Rate hikes could also begin in 2023, depending on inflation. After a lull under Trump, the United States ramps up its energy-market investigations. Traders have abandoned bets for a 10-basis-point increase in the European Central Bank's interest rate in 2022. Both the S&P 500 and the Nasdaq eked out record closing highs after a topsy-turvy Thursday on Wall Street, as investors focused on upbeat retail and technology earnings which outshone hawkish inflation comments from a Federal Reserve policymaker.
By contrast, the Dow continued to play the laggard, registering its third decline this week, as Cisco Systems Inc (NASDAQ:CSCO) weighed on the benchmark. Inflation remains front and center for investors, and stock markets initially slipped after New York Federal Reserve Bank President John Williams said inflation is becoming more broad-based and that expectations for future price increases are rising. Both the S&P and Nasdaq had rebounded by late morning though, with the latter supported by Nvidia (NASDAQ:NVDA). The chipmaker jumped 8.2% after beating quarterly estimates and forecasting strong fourth-quarter revenue. The performance helped the Philadelphia semiconductor index advance 1.8% to hit its second record close in three sessions. The S&P consumer discretionary sector led gains among its peers, ascending 1.5% as positive retail earnings from Macy's and Kohl's joined upbeat reports from Walmart (NYSE:WMT) Inc and Target Corp (NYSE:TGT) earlier this week. Macy's Inc (NYSE:M) surged 21.1%, its largest one-day percentage gain in decades, after it raised its annual earnings guidance and flagged plans for a potential spinoff of its ecommerce division. Peer Kohl's Corp (NYSE:KSS) advanced 10.6% after raising its forecast. The S&P 500 retailing index gained 2.8% to break its record peak for the third session this week, as investors viewed the earnings as a signal of robust consumer demand that has persevered through rising inflation, and that retailers were set for a strong holiday season. "The consumer is stronger than expected; it's good news for the country as a whole. A stronger consumer is a reflection of a strong economic bounce," said Mike Zigmont, head of research and trading at Harvest Volatility Management in New York. Still, concerns over further increases in price pressure, along with uncertainty over the Fed's plans for tightening have kept Wall Street muted this week. "We definitely hit overbought territory and settling in is going to be healthy for us to take the next leg up," said Eric Metz, chief investment officer of Chicago-based SpiderRock Advisors. "Outside of Fed policy or large earnings disappointments, I think there's some pretty stable footing underneath us, but markets can be fickle and so staying prudent is the name of the game right now." The Dow Jones Industrial Average fell 60.1 points, or 0.17%, to 35,870.95, the S&P 500 gained 15.87 points, or 0.34%, to 4,704.54 and the Nasdaq Composite added 72.14 points, or 0.45%, to 15,993.71. The Dow lagged its peers on steep losses in network gear maker Cisco, which tumbled 5.5% after it forecast current-quarter revenue below expectations due to supply chain shortages and delays. Visa Inc (NYSE:V) declined for a second day, with its 0.8% fall taking it to its lowest close since Feb. 3, after news that Amazon.com Inc (NASDAQ:AMZN) may pare back its relationship with the payments company. Volume on U.S. exchanges was 11.09 billion shares, compared with the 11.14 billion average for the full session over the last 20 trading days. The S&P 500 posted 40 new 52-week highs and nine new lows; the Nasdaq Composite recorded 103 new highs and 407 new lows. |
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