What you need to know…
The S&P 500 Index ($SPX) (SPY) on Monday closed +0.74%, the Dow Jones Industrials Index ($DOWI) (DIA) closed +0.58%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up. +1.19%
Stocks rallied on Monday, with the S&P 500 posting a 3-1/2-month high, the Dow Jones Industrials posting a 3-month high, and the Nasdaq 100 posting a 1-3/4-year high. Strength in technology stocks led the overall market higher, with Microsoft and Nvidia climbing to record highs on renewed artificial intelligence optimism. Stocks extended their gains Monday afternoon as T-note yields fell back from early highs and moved lower.
Strength in semiconductors on Monday was another supportive factor for the overall market. Bearish factors included a hawkish comment from Richmond Fed President Barkin, who said he favored a higher interest rate for longer because of stubborn inflation, and Monday’s news that October’s leading indicators fell more than expected.
An excellent outlook for the holiday shopping season shows support for stocks. A Deloitte survey shows that consumers plan to spend an average of $567 during Black Friday and Cyber Monday shopping events, up +13% from last year. The National Retail Federation also projects that 182 million people plan to shop from Thanksgiving to Cyber Monday, the most since 2017.
Main indicators of the US Oct fell -0.8% m/m, slightly weaker than expectations of -0.7% m/m and the biggest decline in 6 months.
Richmond Fed President Barkin said, “I see that inflation is stubborn, and that makes me higher for longer” on interest rates.
The markets are discounting a 0% chance for a +25 bp rate at the next FOMC meeting on December 12-13 FOMC and a 0% chance for that +25 bp rate at the next FOMC meeting on December 30-31 on January 2024. The markets are then discounting a +28% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 74% chance for that same -25 bp rate cut tapering at the April 30-May 1, 2024 FOMC meeting.
US and European government bond yields were mixed on Monday. The 10-year T-note yield fell -1.9 bp to 4.416%. The 10-year German bund yield rose +2.3 bp to 2.611%. The 10-year UK gilt yield rose +2.1 bp to 4.125%.
ECB Governing Council member Wunsch said the ECB may have to raise interest rates again if investor bets on monetary easing undermine the central bank’s policy stance as markets take an “optimistic” view discounting the possibility of further rate hikes and waiting tax reduction. from the ECB immediately in April.
Foreign stock markets were mixed on Monday. The Euro Stoxx 50 closed up +0.04%. China’s Shanghai Composite Index closed up +0.46%. Japan’s Nikkei Stock Index closed down -0.59%.
Today’s stock movers…
Paramount Global ( PARA ) closed up more than +5% after it sold its Bellator MMA to the Professional Fighters League.
Palo Alto Networks (PANW) closed up more than +5% after it announced that it will repurchase up to an additional $316.7 million of its shares, an increase to the existing repurchase plan of $3.3 billion.
Boeing (BA) closed up more than +4% to lead gainers in the Dow Jones Industrials after Deutsche Bank upgraded the stock to buy with a price target of $270.
Semiconductor stocks rallied on Monday and boosted the overall market. Globalfoundries (GFS) closed up more than +3%. Also, Nvidia (NVDA), Intel (INTC), Lam Research (LRCX), Applied Materials (AMAT), and KLA Corp (KLAC) closed up more than +2%.
Arm Holdings Plc (ARM) closed up more than +6% after Wells Fargo Securities initiated coverage on the stock with an overweight recommendation and a price target of $70.
Palantir Technologies (PLTR) closed up more than +4% after Wilian O’Neill reinstated coverage of the stock with a buy recommendation.
Equifax (EFX) closed up more than +2% after Citigroup initiated coverage on the stock with a buy recommendation and a price target of $243.
Bristol-Meyers Squibb ( BMY ) closed down more than -2% to lead losers in the S&P 500 after rival Bayer AG halted a Phase III trial of rival drug Asundexian due to lack of efficacy, which could lead to FDA scrutiny of rival drug Milvexian of Bristol. .
Packaging stocks retreated on Monday after the industry benchmark price was cut for the sixth time this year in a reduction of $20 per tonne. As a result, International Paper (IP) closed more than -2%, and Packaging Corp of America (PKG) closed more than -1%.
United Rentals (URI) closed down more than -1% after peer Ashstead Plc cut its full-year group and US rental income forecast to +11% to +13% from a previous forecast of +13% to +16%.
Expedia Group ( EXPE ) closed down more than -1% on signs of insider selling after an SEC filing showed CLO Dzielak sold $9.42 million of his company’s stock last Friday.
Chegg (CHGG) closed up more than -6% after Morgan Stanley downgraded the stock to underweight with a price target of $9.
Ryan Specialty Holdings (RYAN) closed down -0.91% after Goldman Sachs downgraded the stock to neutral from buy.
KB Home (KBH) closed down -0.82% after Wedbush downgraded the stock to neutral from outperform.
Through the markets…
December 10-year T-notes (ZNZ23) closed up +3 ticks on Monday, and the 10-year T-note yield fell -1.9 bp to 4.416%. Dec T notes on Monday recovered from early losses and posted modest gains. Short coverage appeared in T-notes Mondy afternoon on relief the $16 billion Treasury auction of 20-year T-bonds was not a disaster, although demand was tepid with a bid-to-cover ratio of 2.58, below the 10 auction. an average of 2.66. The market has been concerned about demand for long-dated Treasuries following the disastrous 30-year T-bond auction earlier this month.
T notes on Monday initially opened lower on negative transmission of a decline in 10-year German bonds after ECB Governing Council member Wunsch warned that the ECB may have to raise interest rates again if investor bets on monetary easing undermine the policy attitude of the central bank. Also, hawkish comments Monday from Richmond Fed President Barkin weighed on T-notes, when he said he favored keeping interest rates higher for longer because of stubborn inflation.
More Stock Market News from Barchart
As of 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 for informational purposes only. For more information, please see Barchart’s 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.