The coming Friday’s producer price index should also provide more clarity on the direction of inflation, along with next week’s November consumer price index.
The S&P 500 finished up 0.75%, to finish at 3,963.51, as the Dow Jones Industrial Average increased 183.56 points, or 0.55%, to finish at 33,781.48. The Nasdaq Composite increased 1.13% to finish at 11,082.00.
Stocks are on track to end the week down 1.88%, despite Thursday’s rally. The Dow, S&P, and Nasdaq are all set to finish 2.66% and 3.31% lower, respectively.
“The market has been very volatile over the last few days,” said Quincy Krosby, LPL Financial’s global strategist. “We could see a modest rally based on the continuing claims data, which was released yesterday.”
Continuing claims rose slightly last week, a small sign of improvement in the economy that could add fuel to the fire of the labor market needing to weaken in order for the Federal Reserve to successfully curtail inflation.
“Unfortunately, we’re once again up to our ears in good news,” Krosby said.
Thursday’s rally lifted Nvidia and Amazon, two battered technology stocks, by 6.5% and 2.1%, respectively. As FTC attorneys seek to stop the merger between Microsoft and Activision Blizzard, the company’s shares plummeted 11%. GameStop, which released its earnings late Wednesday, rose 11% as a result.
Next week’s Federal Reserve policy meeting is attracting laser-like investor attention, as it is widely expected to result in a 50-basis-point increase in interest rates. Although the increase will be less than the prior four hikes, Recession fears may not be allayed, as the Fed attempts to suppress inflation.
The November consumer price index should provide more clarity on the direction of inflation, as well as the producer price index slated for Friday, next week.
The S&P 500 ended higher today, breaking a five-day streak of declines.
The S&P 500 ended higher today, finally ending its longest losing streak since October.
The S&P 500 finished up 0.75% at 3,963.51, while the Dow Jones Industrial Average rose 183.56 points, or 0.55%, to finish at 33,781.48. The Nasdaq Composite jumped 1.13% to finish at 11,082.00.
BTIG’s Krinsky says the market wants ‘stable’ rates.
According to BTIG’s Jonathan Krinsky, investors are seeking stability after bond yields moved recently.
“Right now, bond prices are signaling that investors want ‘stable’ interest rates going forward,” he noted in a note to clients on Thursday. “Based on most measurements, bonds are extremely overbought on a daily basis, suggesting that bond prices may fall in the near term (resulting in higher interest rates). It will be interesting to see how the equity market responds to that scenario.”
The yield on the 10-year Treasury note rose 9 basis points to 3.498% as stocks rose Thursday. The 2-year yield rose 6 basis points to 4.32% as a result.
Read this FintechZoom Article: Understanding 2-Year Treasury Rate Investing.
According to Krinsky, the bounce in equities on Thursday was not unusual, given the recent selloff and the forthcoming inflation data.
“However, we would be surprised if things ran too far to the upside, and we expect 3,985-4,000 to cap any further rallies today,” he wrote.
By 2020, Ned Davis Research forecasts that stocks will account for 5% less of investors’ portfolios than they did before the financial crisis.
In recent days, Ned Davis Research has increased its investment in stocks, the firm said Wednesday.
Instead of keeping cash at 5% of their portfolios, clients should consider adding stocks to bring the overall allocation to 55% stocks, 35% bonds, and 10% cash.
The firm’s chief U.S. strategist, Ed Clissold, said that the decision weighed both the short-term technical lifts in October and the fact that intermediate- and long-term breadth indicators didn’t signify a new bull market. He also said that models showing improvement were part of the decision.
Clissold noted that Schwab’s model recommends keeping stock exposure below 64.2%, which is the model’s stock allocation. He said that there was no confirmation of a bull market from intermediate and long-term indicators in addition to broader concerns about the economy that led to their decision not to match the model.
The model has the highest exposure to stocks from December 2021 onward.
The final trading hour began with stocks higher.
The final hour of trading got off to a strong start Thursday as stocks rose.
The Dow Jones Industrial Average rose 100 points, or 0.3%. The S&P 500 rose 0.5%, and the Nasdaq Composite rose 0.9%.
PVH is a top-pick stock for 2023, according to UBS.
UBS rates the fashion firm behind Calvin Klein and Tommy Hilfiger as a standout choice.
PVH is one of the 40 stocks covered by the firm, and one of the most likely to beat expectations for earnings next year. Analyst Jay Sole believes the stock is a buy and has a $100 target, which represents an upside of 37.3% over where it closed Wednesday.
The stock has risen 3.7% on the back of the new plan to revolutionize the firm’s business strategy.
“Sole said in a note to clients that PVH’s new management team is simply modernizing a company that has fallen behind peers in some areas.”
The FTC is suing to block Microsoft’s acquisition of Activision Blizzard.
The Federal Trade Commission has announced that it is suing to prevent Microsoft’s acquisition of Activision Blizzard, Inc.
Many investors have always seen the Microsoft-Acquired game company as a poor investment, despite the fact that the corporation bought it for $95 per share in January. Because Activision’s shares have consistently been valued significantly lower than the purchase price, antitrust regulators are probably to reject the deal.
Microsoft and Activision Blizzard both declined more than 1% today.
Boeing looks set for a strong year in 2023, according to Cowen.
Boeing is one of Cowen’s favorite plays in the aerospace & defense industry, as he believes that improving industry fundamentals should increase its orderbook.
Cai von Rumohr, an analyst, said that aircraft orders could see a steady recovery next year as global travel continues to rebound from the pandemic.
According to the note, widebody orders are expected to rise in 2023 as international traffic recovers and replacement becomes a more significant issue, particularly for widebodies, where populations are older. Investors may bid up aerospace valuations as they realise that this is more than just a short cyclical uptick, the note says.
Cowen said that cash margins on Boeing’s 787 planes could reach 2018 levels.
According to the note, BA has positioned itself to benefit from volume recovery and headcounts geared for higher production by leveraging earnings and cash flow.
Cowen believes the company’s stock price will rise to $230. Boeing was worth around $181 per share on Thursday afternoon.
Based on its current analysis, BofA believes that the Fed’s longer-term outlook on interest rates has changed.
According to Bank of America predictions, the Federal Reserve will raise its benchmark loan rate by half a percentage point next week and signal that future increases will be larger than previously forecast.
The bank’s economic team anticipates the Federal Open Market Committee will raise the fed funds rate by 0.5 percentage points, bringing it to a target range of 4.25%-4.5%.
According to BofA, the post-meeting statement will remain largely unchanged, and most of the FOMC’s updated Summary of Economic Projections GDP, inflation, and unemployment estimates will remain unchanged.
Economists, on the other hand, believe that the significant shift will be in how officials will see rates rising and how long they will remain elevated. According to BofA, the Fed will raise rates half a percentage point in December and February, followed by a quarter-percentage-point increase in March, bringing the terminal rate to 5%-5.25%.
The bank believes that Jerome Powell, the chairman of the Federal Reserve, will take a hawkish stance at his post-meeting press conference.
Chairperson Powell should push back against financial conditions and emphasise that a slower pace of increases does not signify a lower terminal rate, according to economists. Their work is far from finished, they said.
Piper R. Sandler says that JPMorgan Chase is the `gold standard’ of banking and that she has initiated coverage of the company with a buy rating and a $150 price target.
R. Scott Siefers, Piper Sandler analyst, named JPMorgan Chase his favourite among the major U.S. banks.
He began his coverage of JPMorgan on Thursday with an “overweight” rating and a $150 price target. He also started coverage of Bank of America and Citigroup with “neutral” ratings and maintained his “overweight” rating on Wells Fargo.
“JPMorgan is the gold standard in banking, and it is well worth the premium,” Siefers said.
“It is without doubt the country’s greatest and most comprehensive bank, if not the world’s,” he said. “JPM has a leading position in retail, commercial, investment banking, asset management, payments, and technological innovation, among other things.”
JPMorgan’s stock has fared relatively well this year, dropping about 17% compared with the 25% plunge in the KBW Bank Index.
When it comes to banking, JPMorgan and Bank of America are the nation’s two most comprehensive franchises, while Citigroup and Wells Fargo are turnaround cases, he said. Together, they control nearly 40% of the nation’s deposits, he said.
According to Bernstein, Chipotle will be a leading company in 2023.
According to Bernstein analyst Danilo Gargiulo, Chipotle is a top 2023 pick despite investors’ tendency to overlook it.
There are several avenues for boosting profitability at the chain in 2023, when the lower-income population grows and inflation abates. As it currently appears, the company is far less recession resistant than it actually is.
“According to Gargiulo, CMG should be able to compound even in softer macro conditions by attracting high-income consumers, leveraging a strong debt-free balance sheet to fuel growth, and having a track-record of growth stickiness during previous recessions.”
Chipotle currently offers an attractive entry point—the stock is down nearly 14% year to date. In addition to short-term opportunities, Bernstein sees the long-term growth algorithm intact for Chipotle.
Bernstein, who has an outperform rating on the company’s shares, sees more than 25% upside.
According to Goldman, holiday spending is ‘flat’ and prices are falling.
The firm says promotional holiday spending appears to be meeting expectations, based on recent data from MasterCard Inc. and Visa Inc. on consumer spending.
Jan Hatzius, the firm’s chief economist, noted in a research note on Thursday that it appears that retail sales fell 0.2% in November from October and remained flat in December.
According to Hatzius, a panel of online merchants indicates a below-trend report for November. During the week of Black Friday, Adobe found that online spending had risen 4% year-over-year. While last year’s e-commerce growth was 10.8% in the third quarter, this year’s growth was only 3.0%.
According to Fiserv and Redbook’s department store panel, credit card spending was down during the Black Friday week because people wanted to get bargins. Sales were down from the previous week, resulting in a slow November.
Amazon held a second Prime Day sale in October, and competitors retaliated with their own comparable promotions, according to Hatzius. Retailers pulled demand forward into the month, he said. California stimulus checks also aided the month’s sales.
Goldman Sachs retail analysts and Adobe data have both been instrumental in documenting the depth of discounting. Based on data from Adobe, online apparel prices dropped by 15.5% in November, putting pressure on retail profits.
According to Bank of America, Lowe’s is ‘very attractive’ and able to rally another 34% in the future.
According to Bank of America, Lowe’s is one of the more rewarding hardline retail stories when it comes to total shareholder return.
During an event for investors and analysts on Wednesday, Lowe’s provided scenarios for 2023 and beyond. Suzuki projected that Lowe’s U.S. operations might generate $8 billion to $92 billion in sales in 2023, depending on a moderate or robust economic climate, with same-store sales declining between -4% and rising 2%.
According to Suzuki, Lowe’s will post 1% same-store-sales growth and operating margins of 13.3% and 13.9%, respectively. Even in the most bearish scenarios, Lowe’s looks cheap, she said. If home improvement sales normalize to pre-Covid levels, home improvement sales would decline 16% year over year, she said. If a housing crisis is added to the mix, sales might decline by 25%, she said.
LOW’s current P/E of 14.2x against the 10-year pre-COVID average 1-year forward P/E of 16.8x is 2.6 turns lower. According to Suzuki, this suggests that LOW’s shares are already anticipating a full return to pre-COVID home improvement trends.
34% growth from Wednesday’s close is implied by her price target of $278.
30-year fixed rate mortgages interest rates have dropped.
According to Freddie Mac, the cost of financing a home has declined for a fourth consecutive week.
The interest rate on a 30-year mortgage dropped to 6.33% last week from 6.49% the previous week, according to Mortgage News Daily. Over the past month, these loans have experienced a substantial decline in interest rates: On November 10, the typical interest rate on a fixed 30-year mortgage was 7.08%.
The cost of financing a home loan has increased significantly, even though demand has dropped in the short term. A year ago, the rate on a 30-year mortgage averaged 3.1%.
Despite the drop in rates, demand for home loans is falling. According to the Mortgage Bankers Association, application volume was down 1.9% last week, compared to the week before that.
Hershey’s stock has been upgraded by UBS, and the firm expects the chocolate maker to continue outperforming market expectations.
UBS raised its projections for Hershey after noticing the company’s habit of beating expectations for a quarter and raising expectations for future runs through 2025.
On Wednesday, Cody Ross increased his price target on Facebook stock from $241 to $269, implying a 13.7% rise from current levels.
“Wrap-around price advantages in 2023 and extra capacity are the rationale for near-term confidence,” he wrote in a note to clients. Long-term expectations, on the other hand, are due to a more welcoming operating atmosphere in Confection and the long-term development potential of the large Snacks business.
Its stock rose 1.6% Thursday, as the candy giant gained 22.3% since the start of the year, defying the broader market’s decline.
Charts are used to display data in a more visual format.
A glance at the chart reveals that it has only one X axis, which represents time, ranging from January 3, 2022 to December 8, 2022.
Salesforce could be hurt by leadership departures and a less optimistic future hiring outlook, according to Baird analyst Alex Vernon.
Because of recent leadership departures and because the company’s fundamentals are weakening, Baird downgraded Salesforce to neutral from outperform, according to Campbell.
According to analyst Rob Oliver, Salesforce’s (CRM) target of $150 is down from $200, representing an increase of 15%, which he believes will be negatively affected by corporate layoffs or slower hiring. He says the company’s success depends on as many employees as possible using their software.
Macroeconomic headwinds and seat-based software pressure (due to recent workforce layoffs/hiring slowdowns) could slow revenue growth in the near future, according to Oliver. “The rise in executive turnover… combined are unexpected and may forecast execution risk.”
Salesforce dropped slightly Thursday. The stock has dropped 48.7% since January of 2022.
Despite the shutdown of the Keystone pipeline, oil futures gave up big gains.
Concerns faded early sharp gains were erased on oil futures as concerns faded that a shutdown of the Keystone Pipeline would have a significant impact on supplies.
According to news accounts, the Keystone pipeline was halted on Thursday after oil spilled into a Kansas creek. It’s unknown for how long the line will be shut down. The pipeline is the major crossroads for the transportation of Canadian oil from Alberta to Gulf Coast and Midwest refineries.
Supply levels won’t rise significantly thanks to the hurricane, says John Kilduff of Again Capital.
West Texas Intermediate oil futures were flat at $72.04 per barrel, after trading as high as $75.39. Investors were optimistic about a pick-up in demand due to the anticipated reopening of the Chinese economy, driving oil up as well. There were also reports that some tankers filled with Russian crude had been delayed due to new G-7 price caps.
63% of Thursday’s S&P 500 52-week highs are also at all-time records.
A pair of consumer staples companies, one of which is Merck (a Dow Jones Industrial Average component), have six of the nine 52-week highs in the S&P 500 reached all-time highs on Thursday.
The yield curve is now most inverted since 2001.
According to CNBC data, the inversion of the 3-month and 10-year Treasury yield curves is now the most substantial since January 2001, with a spread of nearly 90 basis points. The short end of the curve soared to 4.30% from just 0.05% at the beginning of the year as traders anticipated higher interest rates.
When the 2-year-10-year portion of the yield curve inverts, it indicates that short-term Treasury rates have exceeded longer-term yields. Many economists believe that an inversion in this section is an indication of a potential recession.
A “serious mistake” is being signaled by the bond market, according to Cathie Wood, with an inversion of that part of the yield curve that is the most since the early 1980s.
The S&P 500 is being driven higher by information technology and energy stocks.
Information technology and energy sectors jumped more than 1% Thursday, pushing the S&P 500 higher.
Semiconductor stocks such as Nvidia, Applied Materials, Qualcomm, and Micron Technology saw their information technology sector benefit thanks to gains.
Energy stocks gained from Chevron, Exxon, and Halliburton’s gains.
The rally in tech stocks also pushed the Nasdaq Composite up 1%, as names like Apple, Amazon, and Meta Platforms pushed higher. The S&P last traded about 1% higher after five straight days of declines.
GameStop Corporation’s earnings announcement spurred the company’s stock to rise.
GameStop’s recent fiscal quarter results inspired a 6% rally in GameStop shares on Thursday.
The company that has been widely connected with meme stock frenzy, reported a decline in sales for its fiscal third quarter and a decline in its cash pile.
GameStop CEO Matthew Furlong said during a recent call with investors that the company is attempting to accomplish something unprecedented in retail … save a legacy company on the verge of bankruptcy.
GameStop has endeavored to restore its physical retail operation and concentrate on its digital venture as it attempts to rebound.
Colin Sebastian, one of the few analysts still covering the retailer, suspended his rating and price target on the stock, predicting more store closures and workforce reductions ahead.
The “non-fundamental trading, social media influences, and other factors that make it difficult, at least in the short term, to make a reasonable stock rating recommendation to institutional investors are what make share price volatility happen,” he said.
The stock has declined about 35% this year.
The Dow Jones Industrial Average rose on Thursday after Boeing and Chevron both reported strong results.
The Dow Jones Industrial Average jumped about 190 points, or about 0.6%, on Thursday thanks to Boeing and Chevron advances.
Boeing’s stock rose 4%, while Chevron increased 2% after boosting its capital spending budget.
Dow Jones components Caterpillar, Cisco, Nike, and 3M all gained more than 1% as the Dow rallied.
The S&P 500 attempted to end five straight days of declines in stock prices by opening higher on Wednesday.
The S&P 500 index rose early Thursday after five days of declines.
The Dow Jones Industrial Average futures rose 0.4% today, adding 126 points. Similarly, the S&P 500 and Nasdaq Composite indices gained 0.4%.
— It was written by Samantha Subin.
AT&T’s wireless business is a ‘star,’ according to Argus, which upgraded the company to a buy.
Argus raised AT&T’s rating from hold to buy, anticipating that the telecom company’s customer base would grow and that 5G spending would increase.
“Prioritizing investment in 5G and fiber broadband networks in addition to debt reduction in the near term is critical to establishing the framework for long-term sustainable growth,” wrote analyst Joseph Bonner in a note to clients Wednesday.
AT&T can now concentrate on its telecom business, thanks to the company’s split from WarnerMedia to Discovery. Current macroeconomic conditions notwithstanding, debt reduction and refinancing will help the company weather the storm, he said.
According to Bonner, AT&T’s wireless business has been a star in 2022, because the company has gained a lot of new subscribers despite raising prices. Even though T-Mobile has not gained as many customers as Verizon, which has lost a lot of customers, it has done better than Verizon.
Despite the recent market volatility, AT&T’s stock has risen nearly 4% this year. Using a $24 price target, analysts forecast a nearly 24% jump in the firm’s shares, which closed Wednesday at $24.
Continuing claims hit their highest level since February, boosting jobless claims.
The Labor Department said Thursday that jobless claims rose slightly last week to 230,000, exactly matching the Dow Jones estimate.
The four-week moving average was used to smooth out weekly volatility, and the total for the week ending Dec. 3 was up 4,000 from the previous period.
The number of continuing claims, which lag one week, rose 62,000 to 1.671 million, the highest level since February 5.
stocks to keep an eye on before the ringing of the bell
Thursday’s open is upon us, and these are some of the stocks to watch:
Ciena’s stock jumped more than 17% after networking equipment.
GameStop reported a wider-than-expected quarterly loss and sales that fell short of predictions. CEO Matt Furlong said the company had completed necessary investments and would be very judicious in future spending. GameStop moved between gains and losses in premarket trading.
Rent The Runway’s revenue came in well above Wall Street expectations, contributing to a 16% surge in the company’s stock after reporting its quarterly results. The restructuring process is now considered substantially finished, the company said.
Tesla stock dropped after updated information on its Shanghai plant was released.
Tesla’s shares fell almost 2% in premarket trading following a Bloomberg report that the company will shorten factory shifts in its Shanghai factory and delay new hires.
Chevron Corporation said its capital spending would rise this year, bucking a recent trend of companies cutting back on spending.
Chevron raised its capital spending forecast for 2023 during premarket trading Thursday after gaining 1.3%.
Sprint said Wednesday that it will set aside $17 billion for capital expenditures in 2019. That amount is near the high end of the company’s guidance range.
Exxon Mobil Corp.’s stock climbed 1.2 percent after the oil giant said it would boost its share buyback program.
Exxon announced that it would double its profits and cash flows by 2027 in addition to raising stock buybacks before the bell Thursday morning.
Exxon Mobil announced that it would buy back $50 billion worth of shares through 2024, $15 billion of which would be purchased this year.
Citi predicts that PC demand will continue to be poor in 2023, and as a result, Intel will suffer.
Citi says the pain may not be over for Intel shares.
“The negative catalyst watch that we have opened on Intel is based on our belief that AMD will regain market share in the fourth quarter of 2012. However, we believe that a poor PC environment will continue into 2023, resulting in downward revisions to Intel and AMD consensus estimates from the PC and data center food chains.”
The data centre sector is suffering from a reduction in demand and large stockpiles of personal computers, according to an analyst note released yesterday. A correction is likely to occur during the first half of 2012, he said.
“Within this area, Danely sees the greatest downside risks arising from the enterprise market. Although he is cautious about shares of Advanced Micro Devices, Danely considers it one of the bank’s ‘favored names’ coming out of the upcoming recession.
The 45% drop in Intel stock this year is down.
Hershey has been upgraded by UBS.
According to UBS, our long-term confidence in Confection and Snacks is bolstered by an increasingly accommodating operating environment in those sectors and by wrap-around price advantages in 2023.
According to a survey, stock prices are set to bottom in 2023, and retail investors plan to buy big in big tech.
Investors haven’t been put off by the drop in stock prices this year.
Despite the cost-of-living crisis, most individual investors plan to invest the same amount or more in 2023, according to a new survey from London-based investing insights platform Finimize.
72% of traders plan to invest in individual stock next year, and 64% want to invest in Big Tech like Apple, Microsoft, Google, and Meta Metaphors.
Bank of America predicts that chip companies will benefit from the rise of electric vehicles sales by 75%.
According to Bank of America, the surge in electric-vehicle sales may be aided by a semiconductor shortage.
A 75% rise in two chip stocks’ share prices is being predicted by Wall Street banks on the back of that trend.
GameStop’s earnings boost stock.
In its most recent quarter, GameStop reported a drop in revenue as well as a sharp drop in its cash pile, an indication that the video game retailer is attempting to build up its digital strategy. Comparing the earnings results with estimates is impossible, since there are so few analysts covering the company.
Despite that, the retail stock rose more than 4% in extended trading Wednesday.
It’s now or never for Jerome Powell, according to SoFi’s Liz Young.
According to SoFi’s Liz Young, Jerome Powell must continue his rate hiking campaign.
Jon Young, chief investment officer at Young Investment Group, said on CNBC’s “Closing Bell: Overtime” on Wednesday that if Trump were to save the economy, it would be the wrong move at this time. The CPI is still at 7%, he said, and Trump is backed into a corner.
According to SoFi’s investment strategy head, last month’s jobs report, which showed higher wage growth than expected, is evidence that the economy is heating up. Economists had predicted an increase of 0.6% in average hourly earnings, which was double what was actually observed.
According to Young, the bad news is that the fear of a wage-price spiral is still hanging over our heads.
“He cannot pause or turn in this scenario, in my opinion. I also suspect that he cannot pause yet. That is why I believe that a recession is imminent.”
An investor and a financial journalist square off on whether Apple is a stock to buy or avoid.
Investors have been fleeing growth stocks as interest rates rise and other headwinds buffet tech companies this year.
On Wednesday, CNBC’s “Street Signs Asia” aired a debate between two investors on whether or not to buy the stock.
Here is more information for CNBC Pro members.
Earnings lifted Rent the Runway’s shares.
Rent the Runway’s after-hours trading rally of more than 22% Wednesday was based on revenue results in its recent quarter, which exceeded expectations. Shoppers were motivated to save money with borrowed designer clothes as inflation climbed.
The stock closed at $1.36 during the regular session on Wednesday.
A bar chart illustrates the five stages of the life cycle of a butterfly.
The time span is shown on the primary X axis.
The bar chart has one vertical axis that runs from 1.25 to 2.75.
There are two things to remember.
Stock futures opened little changed.
Stock futures were little changed on Wednesday night as the S&P 500 suffered its fifth straight day of losses, weighing the possibility of a recession.
The Dow Jones Industrial Average futures dropped 9 points, or 0.03%. S&P 500 futures declined 0.03%, while Nasdaq 100 futures dipped 0.02%.
