Market Digests Financial Report and Federal Reserve Meeting Minutes
The US market saw the 2-year Treasury bond yield reach 4.9%, along with major stock indexes closing higher on Wednesday (22nd). Trading volume slowed ahead of the Thanksgiving holiday as investors digested the latest economic data and corporate news.
Market Performance and Economic Data
Small- and mid-cap stocks outperformed the market, with energy stocks in a slump, China’s export restrictions impacting Huida, and Microsoft reaching new highs with the return of Sam Altman to lead OpenAI. The Dow Jones closed nearly 190 points lower, while the Nasdaq and S&P rose more than 0.4%. In terms of economic data, the latest figures from the US Labor Department indicated a decrease in unemployment benefit claims, pointing to companies holding onto workers before the holiday.
On the other hand, durable goods orders fell 5.4% in October, a larger-than-expected decline, reflecting weakened demand for business equipment and a drop in commercial aircraft orders. Additionally, the final consumer confidence index showed a rebound from its initial value but remained at a six-month low, with long-term inflation expectations at their highest level since 2011.
Political and Economic News
The postponement of the OPEC+ production meeting further fueled concerns about global crude oil supply, leading to a decline in energy stocks. Despite reports of an incident at the Rainbow Bridge in Niagara Falls, the stock and bond markets remained relatively unaffected. Minutes from the November monetary policy meeting suggested that interest rates are unlikely to be cut in the near future, with traders predicting a potential rate cut in May of next year.
Stock Index Performance and Corporate News
On Wednesday, the Dow Jones rose, while the Nasdaq and S&P 500 closed in positive territory. Tech giants like Microsoft and Apple led the gains, while stocks such as Exxon Mobil and John Deere experienced declines. The semiconductor sector was mixed, with Nvidia seeing a decrease and AMD posting a rise. Huida, a major player in the technology industry, reported strong profits but warned of a drop in sales due to export restrictions imposed by the Biden administration.
Company Performance
In terms of individual companies, Microsoft and Hewlett-Packard saw gains, while John Deere and Autodesk faced declines in stock prices. Retailer Urban Outfitters reported better-than-expected sales and profits but saw a drop in sales for its namesake brand. Clorox rose in response to a rating upgrade from JPMorgan Chase.
Wall Street Analysis and Economic Data
Market analysts cited concerns about the US economy’s weakness and speculative behavior in anticipation of a potential rate cut. With the upcoming presidential election and ongoing economic uncertainties, investors are bracing for more risks in the markets.
The market is still digesting the financial report and the minutes of the Federal Reserve meeting, The 2-year US Treasury bond yield hit 4.9%, and all major US stock indexes closed higher on Wednesday (22nd). Volume slowed before the Thanksgiving holiday.
Small- and mid-cap stocks outperformed the market on Wednesday, with energy stocks in the doldrums, Huida down nearly 2.5% as China’s export restrictions will have a negative impact, and Microsoft hitting new highs on news that Sam Altman returns to lead OpenAI. The Dow Jones closed nearly 190 points lower, while the Nasdaq and S&P rose more than 0.4%.
As for economic data, the latest data released by the US Labor Department on Wednesday showed that the number of people claiming unemployment benefits last week fell by the most since June, indicating that companies were broadly keeping workers before the Thanksgiving holiday.
Other data showed US durable goods orders fell 5.4% in October, a bigger-than-expected decline, the biggest drop since April 2020, as demand for business equipment weakened and commercial aircraft orders fell.
Data released by the University of Michigan on Wednesday showed that the final consumer confidence index in November rebounded from the initial value, but was still at a six-month low. Long-term inflation expectations remain at their highest level since 2011, while short-term inflation expectations have reached an eight-month high.
In terms of political and economic news, the Organization of the Petroleum Exporting Countries and Russia and other oil producing allies (OPEC+) postponed their production meeting due to differences in oil production. The talks originally scheduled for November 26 will be postponed until November 30 ., which fueled concerns about global crude oil Supply doubts and falling international oil prices have dragged energy stocks down.
The OPEC+ meeting, which includes major producers Saudi Arabia and Russia as well as allies and other members of the Organization of the Petroleum Exporting Countries (OPEC), is expected to consider further changes to the agreement that already limits supply until 2024, it said. sources.
In late trading on Wednesday, there were reports that the Rainbow Bridge in Niagara Falls was closed after a car exploded while traveling from Canada to the United States. Authorities have launched an investigation to determine whether it was a terrorist attack. The stock and bond markets did not react much to the news, underlining that market participants were not overly cautious.
The minutes of the November monetary policy meeting suggested that monetary policy will remain restrictive, and there is no sign of an interest rate cut in the short term. The Chicago Mercantile Exchange’s (CME) FedWatch tool shows that traders predicts that the Fed will most likely cut interest rates in May next year.
Major fund managers say the recent rally that has lifted US stocks and bonds is more like a year-end rebound than an inflection point, arguing that fiscal and monetary policy, next year’s presidential election and recession worries could begin to weigh on markets. .
The performance of the main US stock indexes on Wednesday (22nd): The US Dow Jones Index rose 184.74 points, or 0.53%, to close at 35,273.03 points. The Nasdaq rose 65.88 points, or 0.46%, to close at 14,265.86 points. The S&P 500 index rose 18.43 points, or 0.41%, to close at 4,556.62 points. The Philadelphia Semiconductor Index rose 12.16 points, or 0.33%, to close at 3,744.96 points. The NYSE FANG index rose +16.27 points, or 0.20%, to close at 8,299.01 points. Among the 11 major S&P sectors, only energy stocks were weak, with the communications services sector leading the gains. (Image: finviz) Focus Stocks
The five tech kings in the NYSE FANG+ index are all in high gear. Alphabet (GOOGL-US) rose 1.11%; Meta (META-US) rose 1.34%; Apple (AAPL-US) rose 0.35%; Microsoft (MSFT-US) rose 1.28%; Amazon (AMZN-US) rose 1.95%.
More than half of Dow Jones stocks ended higher. 3M (MMM-US) rose 1.47%; Nike (NKE-US) rose 1.29%; Travelers (TRV-US) rose 1.26%; Goldman Sachs (GS-US) rose 1.1%; Walgreens and Boots (WBA-US) fell 1.38%.
Feiban stocks rose across the board. Qualcomm (QCOM-US) rose 0.38%; Nvidia (NVDA-US) fell 2.46%; Micron (MU-US) rose 0.51%; Applied Materials (AMAT-US) rose 0.37%; AMD (AMD-US) rose 2.81%; Texas Instruments (TXN-US) rose 0.33%.
Taiwan stock ADRs were mixed. TSMC ADR (TSM-US) rose 0.24%; ASE ADR (ASX-US) remained unchanged; UMC ADR (UMC-US) rose 0.13%; Chunghwa Telecom ADR (CHT-US) fell 0.40%.
Corporate News
Crude oil prices fell more than 4% after OPEC+ postponed a production meeting due to disagreements over oil production. Oil giants Exxon Mobil ((XOM-US)) fell 0.43%, Occidental Petroleum (OXY-US) fell 0.89%, and EOG Resources (EOG-US) fell 0.87%.
Microsoft (MSFT-US) closed on a 1.28% dividend at US$377.85 per share, continuing to hit an all-time high. OpenAI announced that Sam Altman will be reinstated as CEO, and the company will establish a new initial board of directors, including Bret Taylor, Larry Summers and Adam D’angelo.
NVDA (NVDA-US), the world’s largest semiconductor maker, closed on a 2.46% dividend at US$487.16 per share. Huida reported strong profits in the third quarter and issued a positive outlook for the fourth quarter, but the company warned that sales to China will drop sharply due to the Biden administration’s export restrictions on advanced artificial intelligence (AI) chips. Wall Street analysts pointed out that the market’s lackluster reaction to Huida’s financial report could be due to its overvalued stock price.
Industrial machinery leader John Deere (DE-US) closed 3.10% lower at $370.76 a share. Deere reported lower-than-expected profits for 2024 as high borrowing costs and tight budgets reduced demand for farm equipment.
Personal computer maker Hewlett-Packard (HPQ-US) rose 2.83% to $28.66 a share. The company expects first-quarter profits to be lower than expected, but demand in the PC market is still improving, and the PC market is expected to grow in fiscal 2024.
Design software company Autodesk ( ADSK-US ) fell 6.90% to $202.66 per share. The company previously reported that total revenue fell 11% in the third quarter, while cash flow from operating activities and free cash flow declined significantly each year.
Multinational lifestyle retailer Urban Outfitters (URBN-US) fell 12.37% to $31.82 per share. Although the clothing retailer reported better-than-expected third-quarter sales and profits, sales of its namesake brand fell.
Clorox ( CLX-US ) rose 0.83% to $140.51 a share. JPMorgan Chase had previously upgraded its rating on the home furnishings maker to “neutral” from “underweight” due to improved entry demand.
Economic data: The number of people claiming initial jobless benefits in the United States last week was 209,000, compared with the expected 225,000, and the revised previous value was 233,000. The final value of the Consumer Confidence Index was 61.3, expected 61.0, and the revised final value previous value 60.4 Wall Street Analysis
“We’re starting to see some signs that the economy is a little weaker than people thought,” said Ryan Israel, chief investment officer at Pershing Square Capital Management.
Mohamed El-Erian, a consultant at Allianz SE, believes: “Based on recent data showing that consumer inflation is falling and the US labor market is softening, the market may be over-speculating on a rate cut interest in early 2024.”
Max Gokhman, head of investment strategy at Franklin Templeton MosaiQ, said: “As we enter 2024, the US presidential election will be extremely competitive, and we anticipate that we will see more risks.”
Juheng Warm Reminder: US stocks will be closed for Thanksgiving on Thursday and close early on Friday
All figures are updated before the closing date, please refer to the actual quote.
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