What you need to know…
The S&P 500 Index ($SPX) (SPY) on Thursday closed up +0.04%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.14%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.05%.
Stocks on Thursday settled mixed, with the S&P 500 climbing to a nearly 2-year high and the Dow Jones Industrials and Nasdaq 100 rallying to new all-time highs. Expectations for the Federal Reserve to begin cutting interest rates early next year are underpinning stocks. Also, technology stocks are finding support amid the artificial intelligence exuberance, which has spurred gains in chip stocks. The Nasdaq gave up its early gains and closed slightly lower as a -3% fall in Tesla weighed on the index.
U.S. economic news Thursday showed weekly U.S. initial unemployment claims rose more than expected and weaker-than-expected Nov pending home sales, dovish factors for Fed policy. On the negative side, crude prices sank more than -3%, weighing on energy stocks.
U.S. weekly initial unemployment claims rose +12,000 to 218,000, showing a weaker labor market than expectations of an increase to 210,000.
U.S. Nov pending home sales were unchanged m/m, weaker than expectations of +0.9% m/m.
The markets are discounting the chances for a -25 bp rate cut at 16% at the next FOMC meeting on Jan 30-31 and have fully discounted (101%) that same -25 bp rate cut for the following meeting on March 19-20.
U.S. and European government bond yields Thursday moved higher. The 10-year T-note yield rose +4.8 bp to 3.837%. The 10-year German bund yield rose +4.9 bp to 1.944%. The 10-year UK gilt yield rose +5.7 bp to 3.493%.
Overseas stock markets on Thursday settled mixed. The Euro Stoxx 50 closed down -0.31%. China’s Shanghai Composite Index closed up +1.38%. Japan’s Nikkei Stock Index closed down -0.42%.
Today’s stock movers…
Real estate investment trusts moved higher Thursday on expectations for Fed rate cuts next year. Mid-America Apartment Communities (MAA), Camden Property Trust (CPT), and Essex Property Trust (ESS) closed up more than +1%.
Casino stocks moved higher Thursday after the Nevada Gaming Board reported that Las Vegas Strip Nov gambling revenue rose +22.6% y/y to $821 million. As a result, Caesars Entertainment (CZR), Las Vegas Sands (LVS), Wynn Resorts Ltd (WYNN), and MGM Resorts International (MGM) closed up more than +1%.
Advanced Micro Devices (AMD) closed up more than +1% to lead gainers in the Nasdaq 100 on optimism that the company’s new AI product line will boost profits next year.
Estee Lauder (EL) closed up more than +1% after Canaccord Genuity raised its price target on the stock to $138 from $109.
American International Group (AIG) closed up more than +1% after HSBC initiated coverage of the stock with a buy recommendation and a price target of $86.
Chubb Ltd (CB) closed up nearly +1% after HSBC initiated coverage on the stock with a buy recommendation and a price target of $263.
Regeneron Pharmaceuticals (REGN) closed up nearly +1%, adding to Wednesday’s +2% gain after a court ruled that the company’s patent rights were infringed by a cheaper copy of an eye drug developed by Viatris.
Tesla (TSLA) closed down more than -3% to lead losers in the S&P 500 and Nasdaq 100 after Reuters reported that two U.S. senators want the company to recall cars that have components with frequent failures that it has been blaming on customers and user errors.
Energy stocks and energy service providers retreated as the price of WTI crude oil tumbled more than -3%. As a result, APA Corp (APA), Hess Corp (HES), and Marathon Petroleum (MPC) closed down more than -2%. Also, Chevron (CVX) closed down more than -1% to lead losers in the Dow Jones Industrials. In addition, Marathon Oil (MRO), Occidental Petroleum (OXY), Exxon Mobil (XOM), Phillips 66 (PSX), ConocoPhillips (COP), Haliburton (HAL), Devon Energy (DVN), Diamondback Energy (FANG), and Schlumberger (SLB) closed down more than -1%.
Boeing (BA) closed down -0.67% after the FAA said it is monitoring targeted inspections of 737 MAX airplanes to look for a possible loose bolt in the plane’s rudder control system.
Across the markets…
March 10-year T-notes (ZNH24) on Thursday closed down -14 ticks, and the 10-year T-note yield rose by +4.8 bp to 3.842%. Mar T-notes Thursday were under pressure on negative carryover from a slide in European government bonds after hawkish ECB comments pushed 10-year German bund yields higher. T-notes dropped to their lows Thursday afternoon on weak demand for the Treasury’s $40 billion auction of 7-year T-notes that were awarded at 3.859%, above the 3.837% when issued (WI) yield at the bidding deadline of the auction.
Losses in T-note prices were limited after Thursday’s U.S. economic news showed weekly jobless claims rose more than expected and Nov pending home sales were weaker than expected.
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 is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
