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U.S. stocks drop on recession fears, Nasdaq closes at new bear market low

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  • Tesla gains 3.3% in choppy trade
  • Southwest Airlines slips 5.2% on government scrutiny
  • Indexes down: Dow 1.1%, S&P 500 1.20%, Nasdaq 1.35%

Dec 28 (Reuters) – Wall Street’s main indexes ended weaker on Wednesday, with the Nasdaq hitting a 2022 closing low, as investors grappled with mixed economic data, rising COVID cases in China, and geopolitical tensions heading into 2023.

The Nasdaq Composite (.IXIC) ended at 10,213.288, the lowest since the bear market began in November 2021 after the index hit a record high. The last time the Nasdaq ended lower was in July 2020. Its previous closing low for 2022 was 10,321.388 on Oct. 14.

“There was no Santa rally this year. The Grinch showed up this December for investors,” said Greg Bassuk, chief executive at AXS Investments in Port Chester, New York.

December is typically a strong month for equities, with a rally in the week after Christmas. The S&P 500 index (.SPX) has posted only 18 Decembers with losses since 1950, Truist Advisory Services data show.

“Normally a Santa Claus Rally is sparked by hopes of factors that will drive economic and market growth,” Bassuk said. “The negative and mixed economic data, greater concerns around COVID reemergence and ongoing geopolitical tensions and … all of that also translating Fed policy is all impeding Santa (from) showing up at the end of this year.”

All 11 of the S&P 500 (.SPX) sector indexes fell on Wednesday. Energy stocks (.SPNY) were the biggest losers, dipping over 2.2% as worries over demand in China weighed on oil prices.

Investors have been assessing China’s move to reopen its COVID-battered economy as infections surged.

“With this current combination of rising cases with an opening up of China restrictions, we’re seeing that investors are concerned that the ramifications are going to spread through many different industries and sectors as it did in the earlier COVID period,” Bassuk said.

The benchmark S&P 500 (.SPX) is down 20% year-to-date, on track for its biggest annual loss since the financial crisis of 2008. The rout has been more severe for the tech-heavy Nasdaq Composite (.IXIC), which closed at the lowest level since July 2020.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 7, 2022. REUTERS/Brendan McDermid

While recent data pointing to an easing in inflationary pressures has bolstered hopes of smaller interest rate hikes by the Federal Reserve, a tight labor market and resilient American economy have spurred worries that rates could stay higher for longer.

Markets are now pricing in 69% odds of a 25-basis point rate hike at the U.S. central bank’s February meeting and see rates peaking at 4.94% in the first half of next year. .

Shares of Tesla Inc (TSLA.O) gained 3.3% in choppy trade, a day after hitting the lowest level in more than two years. The stock is down nearly 69% for the year.

Southwest Airlines Co (LUV.N) dropped 5.2% a day after the carrier came under fire from the U.S. government for canceling thousands of flights.

Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O) and Amazon.com Inc (AMZN.O) fell between 1.5% and 3.1% as the U.S. 10-year Treasury yield recovered from a brief fall to rise for a third straight session.

The Dow Jones Industrial Average (.DJI) fell 365.85 points, or 1.1%, to 32,875.71; the S&P 500 (.SPX) lost 46.03 points, or 1.20%, at 3,783.22; and the Nasdaq Composite (.IXIC) dropped 139.94 points, or 1.35%, to 10,213.29.

Declining issues outnumbered advancers on the NYSE by a 3.77-to-1 ratio; on Nasdaq, a 1.97-to-1 ratio favored decliners.

The S&P 500 posted seven new 52-week highs and seven new lows; the Nasdaq Composite recorded 75 new highs and 421 new lows.

Volume on U.S. exchanges was 8.59 billion shares, compared with the 11.3 billion average for the full session over the last 20 trading days.

Reporting by Echo Wang in New York; Additional reporting by Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Sriraj Kalluvila, Anil D’Silva and Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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Business

Tesla, megacap growth stocks pull Nasdaq lower; Dow rises

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  • Tesla slumps on report of reduced output plan
  • China ADRs rise on reopening optimism
  • Indexes mixed: Dow up 0.40%, S&P down 0.11%, Nasdaq down 0.80%

Dec 27 (Reuters) – The tech-heavy Nasdaq came under pressure on Tuesday following declines in some megacap growth stocks and Tesla, while optimism around an economic recovery in China after the country further eased its COVID-19 curbs helped cap losses.

Tesla Inc (TSLA.O) tumbled 8.1% to hit a more than two-year low after Reuters reported that the electric vehicle maker plans to run a reduced production schedule at its Shanghai plant into January. The stock has lost more than two-thirds of its value this year.

Megacap growth stocks Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O) and Amazon.com Inc (AMZN.O) slipped between 1% and 1.5% as U.S. Treasury yields rose.

The declines made consumer discretionary (.SPLRCD) and technology (.SPLRCT) the worst performers among major S&P 500 (.SPX) sector indexes.

However, sectors closely tied to the economy, such as industrials (.SPLRCI), materials (.SPLRCM) and energy (.SPNY), advanced, helping the Dow Jones (.DJI) to eke out gains.

“What you’re seeing is a battle between investors who are doing year-end tax selling and investors that believe that normal inflows in January will lead to a better market,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

Meckler also pointed to thin trading volumes playing its part in market volatility.

Growth stocks have been under pressure this year from a rise in U.S. Treasury yields after the Federal Reserve embarked on an aggressive interest rate hike campaign to tame a surge in inflation, with investors turning to high dividend-yielding value stocks such as energy.

The S&P 500 growth index (.IGX) has tumbled 30% this year, compared with a 7% drop for the value index (.IVX).

U.S.-listed shares of Chinese firms such as JD.Com Inc , Alibaba Group Holding Ltd and Pinduoduo Inc (PDD.O) climbed between 2% and 3.8% after China said it would stop requiring inbound travelers to go into quarantine starting Jan. 8.

Investors are hoping for a so-called “Santa rally” at the end of what has been a largely disappointing month for U.S. equities.

The S&P 500 (.SPX) and the Nasdaq (.IXIC) have lost around 5.7% and 9% so far in December and are on track for their biggest yearly loss since 2008 as the monetary policy tightening sparked worries of the economy tipping into a recession.

Economic data so far has offered little hope. Inflation has cooled further, but not enough to discourage the U.S. central bank from driving interest rates to higher levels next year.

Money markets are pricing in 59% odds of a 25-basis-point interest rate hike at the Fed’s February meeting and expect rates peaking at 4.98% in May. .

At 11:52 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 133.48 points, or 0.40%, at 33,337.41, the S&P 500 (.SPX) was down 4.22 points, or 0.11%, at 3,840.60, and the Nasdaq Composite (.IXIC) was down 83.89 points, or 0.80%, at 10,413.97.

Southwest Airlines Co (LUV.N) shed 4.9% after cancelling thousands of flights, piling more pressure on the S&P 500.

Declining issues outnumbered advancers for a 1.01-to-1 ratio on the NYSE and 1.43-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and three new lows, while the Nasdaq recorded 61 new highs and 311 new lows.

Reporting by Amruta Khandekar and Ankika Biswas in Bengaluru;
Editing by Vinay Dwivedi and Sriraj Kalluvila

Our Standards: The Thomson Reuters Trust Principles.

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Business

Dow falls nearly 500 points after strong data, bearish comments by David Tepper

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U.S. stocks traded lower on Thursday, erasing most of their gains from their biggest rally in three weeks after a round of upbeat economic data and a warning from hedge-fund titan David Tepper that he was “leaning short” against both stocks and bonds on expectations the Federal Reserve and other central banks will continue tightening into 2023.

Positive economic news can be a negative for stocks by underlining expectations that monetary policy makers will remain aggressive in their efforts to quash inflation.

What’s happening
  • The Dow Jones Industrial Average
    DJIA,
    -1.51%
    fell 472 points, or 1.4%, to 32,903.
  • The S&P 500
    SPX,
    -1.99%
    shed 71 points, or 1.8%, to 3,807.
  • The Nasdaq Composite
    COMP,
    -2.84%
    fell 272 points, or 2.5%, to 10,437.

A day earlier, all three major indexes recorded their best gain in three weeks as the Dow advanced 526.74 points.

What’s driving markets

Investors saw another raft of strong economic data Thursday morning, including a revised reading on third-quarter gross domestic product which showed the U.S. economy expanded more quickly than previously believed. Growth was revised up to 3.2%, up from 2.9% from the previous revision released last month.

See: Economy grew at 3.2% rate in third quarter thanks to strong consumer spending

The number of Americans who applied for unemployment benefits in the week before Christmas rose slightly to 216,000, but new filings remained low and signaled the labor market is still quite strong. Economists polled by The Wall Street Journal had forecast new claims would total 220,000 in the seven days ending Dec 17.

“Jobless claims ticking slightly up but coming in below expectations could be a sign that the Fed’s wish of a slowing labor market will have to wait until 2023. While weekly jobless claims aren’t the best indicator of the overall labor market, they have remained in a robust range these last two months suggesting the labor market remains strong and has withstood the Fed’s tightening, at least for the time being,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office, in emailed comments.

“While weekly jobless claims aren’t the best indicator of the overall labor market, they have remained in a robust range these last two months suggesting the labor market remains strong and has withstood the Fed’s tightening, at least for the time being,” he wrote. “It’s no surprise to see the market take a breather today after yesterday’s rally as investors parse through earnings data, and despite some beats this week, expectations that earnings will remain as resilient in 2023 may be overblown.”

Stocks were feeling pressure after Appaloosa Management’s Tepper shared a cautious outlook for markets based on the expectation that central bankers around the world will continue hiking interest rates.

“I would probably say I’m leaning short on the equity markets right now because the upside-downside doesn’t make sense to me when I have so many people, so many central banks, telling me what they are going to do, what they want to do, what they expect to do,” Tepper said in a CNBC interview.

Key Words: Billionaire investor David Tepper would ‘lean short’ on stock market because central banks are saying ‘what they’re going to do’

A day earlier, the Conference Board’s consumer confidence survey came in at an eight-month high, which helped stoke a rally in stocks initially spurred by strong earnings from Nike Inc. and FedEx Corp. released Tuesday evening. This optimistic outlook helped stocks clinch their best daily performance in three weeks.

Volumes are starting to dry up as the year winds down, making markets more susceptible to bigger moves. According to Dow Jones Market Data, Wednesday saw the least combined volume on major exchanges since Nov. 29.

Read: Is the stock market open on Monday after Christmas Day?

In other economic data news, the U.S. leading index fell a sharp 1% in November, suggesting that the U.S. economy is heading toward a downturn.

Many market strategists are positioned defensively as they expect stocks could tumble to fresh lows in the new year.

See: Wall Street’s stock-market forecasts for 2022 were off by the widest margin since 2008: Will next year be any different?

Katie Stockton, a technical strategist at Fairlead Strategies, warned clients in a Thursday note that they should brace for more downside ahead.

“We expect the major indices to remain firm next week, helped by oversold conditions, but would brace for more downside in January given the recent downturn,” Stockton said.

Others said the latest data and comments from Tepper have simply refocused investors on the fact that the Fed, European Central Bank and now the Bank of Japan are preparing to continue tightening monetary policy.

“Yesterday was the short covering rally, but the bottom line is the trend is still short and we’re still fighting the Fed,” said Eric Diton, president and managing director of the Wealth Alliance.

Single-stock movers
  • AMC Entertainment Holdings 
    AMC,
    -14.91%
    was down sharply after the movie theater operator announced a $110 million equity capital raise.
  • Tesla Inc. 
    TSLA,
    -8.18%
    shares continued to tumble as the company has been one of the worst performers on the S&P 500 this year.
  • Shares of Verizon Communications Inc. 
    VZ,
    -0.53%
    were down again on Thursday as the company heads for its worst year on record.
  • Shares of CarMax Inc. 
    KMX,
    -6.60%
    tumbled after the used vehicle seller reported fiscal third-quarter profit and sales that dropped well below expectations.
  • Chipmakers and suppliers of equipment and materials, including Nvidia Corp.
    NVDA,
    -8.60%,
    Advanced Micro Devices 
    AMD,
    -7.17%
    and Applied Materials Inc.
    AMAT,
    -8.54%,
    were lower on Thursday.

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Business

Wall Street ends up with help from Nike, FedEx and consumer sentiment

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  • Consumer confidence rebounds in December
  • Data shows November home sales decline
  • Nike jumps on strong second-quarter results
  • FedEx soars on cost-cutting plans
  • Indexes up: Dow 1.60%, S&P 1.49%, Nasdaq 1.54%

Dec 21 (Reuters) – Wall Street’s three main stock indexes closed higher on Wednesday for their biggest daily gains so far in December with help from upbeat Nike (NKE.N) and FedEx (FDX.N) quarterly earnings, as well as improving consumer confidence and easing inflation expectations from investors.

Nike Inc shares soared 12% after beating profit expectations for its second quarter on strong holiday demand from North American shoppers, while FedEx finished up 3.4% and shares in cruise operator Carnival Corp (CCL.N) jumped 4.7% after posting a smaller-than-expected quarterly loss.

FedEx Corp (FDX.N), which sparked a market selloff in September after pulling financial forecasts, provided financial guidance and announced plans for $1 billion cost cuts.

Also, U.S. consumer confidence rose to an eight-month high in December as inflation retreated and the labor market remained strong while 12-month inflation expectations fell to 6.7%, the lowest since September 2021.

“We’re seeing a broad rally. It’s been helped by upbeat corporate commentary and an improvement in consumer confidence,” said Angelo Kourkafas, investment strategist at Edward Jones in St. Louis referring to Nike and FedEx.

The Dow Jones Industrial Average (.DJI) rose 526.74 points, or 1.6%, to 33,376.48, the S&P 500 (.SPX) gained 56.82 points, or 1.49%, to 3,878.44 and the Nasdaq Composite (.IXIC) added 162.26 points, or 1.54%, to 10,709.37.

Energy firms (.SPNY) were the biggest gainers among the S&P’s 11 major industry sector, adding 1.89%, as oil futures rose.

The smallest gainer among the sectors was consumer staples (.SPLRCS), which finished up 0.8%.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 7, 2022. REUTERS/Brendan McDermid

Still, Wednesday’s data also showed that U.S. existing home sales slumped 7.7% to a 2-1/2-year low in November as the housing market was hurt by higher mortgage rates. But the data may be fuelling investor hope that the Fed could ease up on its tightening policy.

“At the macro level you have economic weakness but at the micro level you have companies that are resilient and delivering positive expectations from an earnings perspective,” said Brian Price, head of investment management for Commonwealth Financial Network in Waltham, Mass. “That combination is going to be positive.”

Fears of a recession following the U.S. central bank’s prolonged interest rate hikes have weighed heavily on equities and these fears have put the S&P on track for its biggest annual decline since 2008 and a decline for December.

“There’s still a lot of uncertainty and we’re likely to see a lot of volatility early in the year as we could be in a mild recessionary environment,” said Edward Jones’ Kourkafas but he believes the market has already priced in a weaker economy.

“We still have some headwinds ahead but maybe we don’t have to price in a recession twice. So far what we’ve seen this year has already priced in a mild recession.”

AMC Entertainment Holdings Inc (AMC.N) finished up 4.3% after the cinema-chain operator said it suspended talks to acquire certain assets of bankrupt Cineworld Group (CINE.L).

Advancing issues outnumbered declining ones on the NYSE by a 3.43-to-1 ratio; on Nasdaq, a 2.10-to-1 ratio favored advancers.

The S&P 500 posted 5 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 69 new highs and 268 new lows.

On U.S. exchanges 9.81 billion shares changed hands, compared with the 11.16 billion average for the last 20 sessions.

Reporting by Sinéad Carew in New York, Shubham Batra, Amruta Khandekar, Ankika Biswas and Johann M Cherian in Bengaluru; Editing by Shounak Dasgupta, Maju Samuel and Aurora Ellis

Our Standards: The Thomson Reuters Trust Principles.

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Business

Wall Street falls fourth straight day as recession worries nag

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  • Fed hikes, recession fears in focus
  • L3Harris slides after $4.7 bln Aerojet buyout Indexes down: Dow 0.49%, S&P 0.90%, Nasdaq 1.49%

Dec 19 (Reuters) – Wall Street closed lower on Monday for a fourth straight session with Nasdaq leading declines as investors shied away from riskier bets, worried the Federal Reserve’s tightening campaign could push the U.S. economy into a recession.

The three major U.S. stock indexes have been under pressure since Wednesday, when Fed Chair Jerome Powell took a hawkish tone while the central bank raised interest rates. Powell promised further rate increases even as data showed signs of a weakening economy.

The S&P 500 (.SPX), the Dow Jones industrials (.DJI) and the Nasdaq have sold off sharply for December and are on track for their biggest annual declines since the 2008 financial crisis.

While U.S. Treasury yields gained, investors ran from stocks, eyeing prospects of safer bets as they worried about the likelihood of a recession in 2023 according to Brian Overby, senior markets strategist at Ally.

“Investors are asking why do I want to take those risks going into 2023 with the Fed’s stance still aggressive when I can get such a good yield on the fixed income market place,” he said.

The lack of big earnings reports or economic data on Monday likely sharpened investors’ focus on economic fears and interest rates, according to Melissa Brown, Global Head of Applied Research at Qontigo in New York.

“It’s a knife edge between whether we’re going to teeter into a recession or have a soft landing. Is the Fed acting appropriately?” said Brown who also noted that moves may be exaggerated as many investors take vacation around the end-of-year holidays.

The Dow Jones Industrial Average (.DJI) fell 162.92 points, or 0.49%, to 32,757.54, the S&P 500 (.SPX) lost 34.7 points, or 0.90%, to 3,817.66 and the Nasdaq Composite (.IXIC) dropped 159.38 points, or 1.49%, to 10,546.03.

The biggest decliners among S&P industry sectors were communications services (.SPLRCL), which fell 2.2%, consumer discretionary (.SPLRCD), down 1.7% and technology (.SPLRCT), which lost 1.4%. Energy (.SPNY) outperformed, closing up 0.13% as the sole industry out of 11 to manage a gain.

Market heavyweights such as Apple Inc (AAPL.O), Microsoft Corp (MSFT.O) and Amazon.com Inc (AMZN.O) created some of the biggest drags on the market.

Trading in Tesla Inc (TSLA.O) was volatile with the electric carmaker closing down 0.24% after falling as much as 2.8% during the session. This was after a Twitter poll that showed a majority of respondents want Tesla Chief Executive Elon Musk to step down as CEO of the social media platform.

Meta Platforms (META.O) shares finished down 4.1% after the European Commission said it could impose a fine of up to 10% of the tech conglomerate’s annual global turnover if evidence showed an infringement of the EU’s antitrust laws.

L3Harris Technologies Inc (LHX.N) lost 3.6% after the U.S. defense contractor said it would buy hypersonic engine manufacturer Aerojet Rocketdyne Holdings Inc (AJRD.N) for $4.7 billion. Aerojet added 1.3%.

Shares of casino operators Melco Resorts & Entertainment tumbled just under 8% and Wynn Resorts (WYNN.O) lost 5.2% while Las Vegas Sands Corp (LVS.N) fell 2.3% after Macau said on Friday that six casino firms will invest around $15 billion as part of new 10-year contracts they signed to operate in the world’s biggest gambling hub.

Declining issues outnumbered advancing ones on the NYSE by a 2.80-to-1 ratio; on Nasdaq, a 2.63-to-1 ratio favored decliners.

The S&P 500 posted 5 new 52-week highs and 20 new lows; the Nasdaq Composite recorded 66 new highs and 456 new lows.

On U.S. exchanges 11.07 billion shares changed hands, compared with the 11.59 billion average for the last 20 trading days.

Reporting by Sinéad Carew, Sruthi Shankar, Shubham Batra, Johann M Cherian and Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty, Maju Samuel and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

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Business

The stock market is sliding because investors fear recession more than inflation

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A stock-market paradox, in which bad news about the economy is seen as good news for equities, may have run its course. If so, investors should expect bad news to be bad news for stocks heading into the new year — and there may be plenty of it.

But first, why would good news be bad news? Investors have spent 2022 largely focused on the Federal Reserve and its rapid series of large rate hikes aimed at bringing inflation to heel. Economic news pointing to slower growth and less fuel for inflation could serve to lift stocks on the idea that the Fed could begin to slow the pace or even begin entertaining future rate cuts.

Conversely, good news on the economy could be bad news for stocks.

So what’s changed? The past week saw a softer-than-expected November consumer-price index reading. While still running mighty hot, with prices rising more than 7% year over year, investors are increasingly confident that inflation likely peaked at a roughly four-decade high above 9% in June.

See: Why November’s CPI data are seen as a ‘game-changer’ for financial markets

But the Federal Reserve and other major central banks indicated they intend to keep lifting rates, albeit at a slower pace, into 2023 and likely keep them elevated longer than investors had anticipated. That’s stoking fears that a recession is becoming more likely.

Meanwhile, markets are behaving as if the worst of the inflation scare is in the rearview mirror, with recession fears now looming on the horizon, said Jim Baird, chief investment officer of Plante Moran Financial Advisors.

That sentiment was reinforced by manufacturing data Wednesday and a weaker-than-expected retail sales reading on Thursday, Baird said, in a phone interview.

Markets are “probably headed back to a period where bad news is bad news not because rates will be driving concerns for investors, but because earnings growth will falter,” Baird said.

A ‘reverse Tepper trade’

Keith Lerner, co-chief investment officer at Truist, argued that a mirror image of the backdrop that produced what became known as the “Tepper trade,” inspired by hedge-fund titan David Tepper in September 2010, may be forming.

Unfortunately, while Tepper’s prescient call was for a “win/win scenario.” the “reverse Tepper trade” is shaping up as a lose/lose proposition, Lerner said, in a Friday note.

Tepper’s argument was that the economy was either going to get better, which would be positive for stocks and asset prices. Or, the economy would weaken, with the Fed stepping in to support the market, which would also be positive for asset prices.

The current setup is one in which the economy is going to weaken, taming inflation but also denting corporate profits and challenging asset prices, Lerner said. Or, instead, the economy remains strong, along with inflation, with the Fed and other central banks continuing to tighten policy, and challenging asset prices.

“In either case, there’s a potential headwind for investors. To be fair, there is a third path, where inflation comes down, and the economy avoids recession, the so-called soft landing. It’s possible,” Lerner wrote, but noted the path to a soft landing looks increasingly narrow.

Recession jitters were on display Thursday, when November retail sales showed a 0.6% fall, exceeding forecasts for a 0.3% decline and the biggest drop in almost a year. Also, the Philadelphia Fed’s manufacturing index rose, but remained in negative territory, disappointing expectations, while the New York Fed’s Empire State index fell.

Read: Still a bear market: S&P 500 slump signals stocks never reached ‘escape velocity’

Stocks, which had posted moderate losses after the Fed a day earlier lifted interest rates by half a percentage point, tumbled sharply. Equities extended their decline Friday, with the S&P 500
SPX,
-1.11%
logging a 2.1% weekly loss, while the Dow Jones Industrial Average
DJIA,
-0.85%
shed 1.7% and the Nasdaq Composite
COMP,
-0.97%
dropped 2.7%.

“As we move into 2023, economic data will become more of an influence over stocks because the data will tell us the answer to a very important question: How bad will the economic slowdown get? That’s the key question as we begin the new year, because with the Fed on relative policy ‘auto pilot’ (more hikes to start 2023) the key now is growth, and the potential damage from slowing growth,” said Tom Essaye, founder of Sevens Report Research, in a Friday note.

Recession watch

No one can say with complete certainty that a recession will occur in 2023, but it seems there’s no question corporate earnings will come under pressure, and that will be a key driver for markets, said Plante Moran’s Baird. And that means earnings have the potential to be a significant source of volatility in the year ahead.

“If in 2022 the story was inflation and rates, for 2023 it’s going to be earnings and recession risk,” he said.

It’s no longer an environment that favors high-growth, high risk equities, while cyclical factors could be setting up nicely for value-oriented stocks and small caps, he said.

Truist’s Lerner said that until the weight of the evidence shifts, “we maintain our overweight in fixed income, where we are focused on high quality bonds, and a relative underweight in equities.”

Within equities, Truist favors the U.S., a value tilt, and sees “better opportunities below the market’s surface,” such as the equal-weighted S&P 500, a proxy for the average stock.

Highlights of the economic calendar for the week ahead include a revised look at third-quarter gross domestic product on Thursday, along with the November index of leading economic indicators. On Friday, November personal consumption and spending data, including the Fed’s preferred inflation gauge are set for release.

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Business

Wall St rises after CPI data but Fed concerns persist

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  • Consumer prices rise moderately in November
  • Growth, real estate stocks climb as yields fall
  • Moderna surges on upbeat trial data
  • Dow up 0.3%, S&P 500 up 0.73%, Nasdaq up 1.01%

NEW YORK, Dec 13 (Reuters) – U.S. stocks rose on Tuesday after a unexpectedly small consumer price increase buoyed optimism that the Federal Reserve could soon dial back its inflation-taming interest rate hikes, but concerns remained the central back could stay aggressive.

The benchmark S&P 500 (.SPX) jumped as much as 2.76% to a three-month high early in the trading session on news that November U.S. consumer prices barely rose as gasoline and used cars cost less, leading to the smallest annual inflation increase in nearly a year at 7.1%.

Rising expectations for smaller and slower Fed rate hikes sent U.S. Treasury yields sharply lower and helped lift rate-sensitive gauges like the S&P 500 growth index (.IGX), up 1.18%, and the S&P 500 real estate index (.SPLRCR) up 2.04% to their highest intraday levels in nearly three months. The real estate sector notched its biggest daily percentage gain in two weeks as the best performing of the 11 major sectors.

Fed funds futures prices implied a better-than-even chance that the Fed will follow an expected half-point rate hike this week, with smaller 25-basis point hikes at its first two meetings of 2023, and stopping shy of 5% by March.

Morgan Stanley’s chief U.S. economist Ellen Zentner now sees even smaller Fed rate hikes, of 25 basis points at the central bank’s February meeting, and no further increases in March, leaving the peak fed funds rate at 4.625%.

Still, equities pared gains ahead of the Fed’s policy statement on Wednesday, in which the central bank is widely expected to announce a 50 basis point rate hike.

“There was some excitement early on that the CPI number was once again below expectations – it shows some sequential cooling – but once we saw that initial pop, stock investors kind of reassessed,” said Jason Ware, chief investment officer at Albion Financial Group in Salt Lake City, Utah.

“That probably took some of the steam out of the markets once investors realized tomorrow very well may be (Fed Chair) Jerome Powell throwing cold water on the rally today.”

The Dow Jones Industrial Average (.DJI) rose 103.6 points, or 0.3%, to 34,108.64, the S&P 500 (.SPX) gained 29.09 points, or 0.73%, to 4,019.65 and the Nasdaq Composite (.IXIC) added 113.08 points, or 1.01%, to 11,256.81.

[1/3] Screens display the trading information for ExxonMobil on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 9, 2022. REUTERS/Brendan McDermid

Energy (.SPNY), up 1.77%, was among the best performing S&P sectors on the day as the softer-than-anticipated inflation data sent the dollar lower and boosted crude oil prices.

The consumer inflation numbers follow November’s producer prices report last week, which was slightly higher than expected but pointed to a moderation in the trend.

Still, some questioned whether the trend in prices could continue.

“Today’s CPI print is incrementally good, but it needs to be sustained,” said Venu Krishna, head of U.S. equity strategy at Barclays in New York.

“There is a big question mark whether we can really come to the 2% inflation (Fed target). Perhaps we live in a world in which it will be higher and that means rates will be higher and then multiples will certainly be lower.”

Moderna Inc (MRNA.O) surged 19.63% after the biotechnology firm’s experimental vaccine in combination with Merck & Co Inc’s (MRK.N) blockbuster drug Keytruda showed promising results in a skin cancer study. Merck shares advanced 1.78%.

Pinterest Inc (PINS.N) jumped 11.90% after Piper Sandler upgraded the social media platform’s stock to “overweight” from “neutral.”

Advancing issues outnumbered declining ones on the NYSE by a 2.83-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favored advancers.

The S&P 500 posted 18 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 92 new highs and 212 new lows.

Reporting by Chuck Mikolajczak, additional reporting by Carolina Mandl; Editing by Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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Business

Wall Street ends lower as investors digest economic data

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  • U.S. producer prices increase in November
  • Consumer sentiment improves in December
  • Lululemon tumbles after downbeat forecast
  • Indexes close: S&P 500 -0.73%, Nasdaq -0.70%, Dow -0.90%

Dec 9 (Reuters) – Wall Street ended lower on Friday as investors assessed economic data and awaited a potential 50-basis point interest rate hike by the U.S. Federal Reserve at its policy meeting next week, while apparel company Lululemon slumped following a disappointing profit forecast.

U.S. producer prices rose slightly more than expected in November amid a jump in the costs of services, but the trend is moderating, with annual inflation at the factory gate posting its smallest increase in 1-1/2 years, data showed.

“Today’s data shows that inflation is coming down, but it’s lingering and is stickier than most assume,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.
However, in December, consumer sentiment improved, while inflation expectations eased to a 15-month low, a University of Michigan survey showed.

Futures trades suggest a 77% chance the Fed will raise interest rates by 50 basis points next week, with a 23% chance of a 75-basis point hike, with those odds little changed after Friday’s economic data.

Consumer prices data for November, due Tuesday, will provide fresh clues on the central bank’s monetary tightening plans.

Lululemon Athletica Inc (LULU.O) tumbled almost 13% after the Canadian athletic apparel maker forecast lower-than-expected holiday-quarter revenue and profit.

Netflix Inc (NFLX.O) gained 3.1% after Wells Fargo upgraded the video streaming giant to “overweight” from “equal weight”.

The S&P 500 declined 0.73% to end the session at 3,934.38 points.

The Nasdaq declined 0.70% to 11,004.62 points, while Dow Jones Industrial Average declined 0.90% to 33,476.46 points.

[1/7] Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 9, 2022. REUTERS/Brendan McDermid

Of the 11 S&P 500 sector indexes, 10 declined, led lower by energy (.SPNY), down 2.33%, followed by a 1.28% loss in health care (.SPXHC).

The energy index recorded a seventh straight session of losses, its longest losing streak since December 2018, as oil prices looked set for weekly losses on recession concerns.

Wall Street’s main indexes have fallen this week after logging two straight weekly gains. Weighing heavily on investors are fears of a potential recession next year due to extended the central bank’s rate hikes.

For the week, the S&P 500 dropped 3.4%, the Dow lost 2.8% and the Nasdaq shed 4%.

U.S. stocks ended a recent run of losses on Thursday after data showed initial jobless claims rose modestly last week.

Broadcom Inc (AVGO.O) jumped 2.6% after the chipmaker forecast current-quarter revenue above Wall Street estimates.

Boeing Co climbed 0.3% after Reuters report the plane maker plans to announce a deal with United Airlines (UAL.O) for orders of 787 Dreamliner next week.

Declining stocks outnumbered rising ones within the S&P 500 (.AD.SPX) by a 3.3-to-one ratio.

The S&P 500 posted 5 new highs and 1 new lows; the Nasdaq recorded 54 new highs and 213 new lows.

Volume on U.S. exchanges was relatively light, with 9.9 billion shares traded, compared to an average of 10.9 billion shares over the previous 20 sessions.

Reporting by Sruthi Shankar, Ankika Biswas and Johann M Cherian in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Vinay Dwivedi, Sriraj Kalluvila, Shounak Dasgupta and Aurora Ellis

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Business

S&P 500, Nasdaq snap losing streaks after jobless claims rise

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  • Weekly jobless claims rise in line with estimates
  • Moderna, Pfizer up as FDA authorizes updated COVID boosters
  • Exxon climbs after boosting buyback program
  • Indexes up: Dow 0.55%, S&P 0.75%, Nasdaq 1.13%

Dec 8 (Reuters) – The S&P 500 (.SPX) ended higher on Thursday, snapping a five-session losing streak, as investors interpreted data showing a rise in weekly jobless claims as a sign the pace of interest rate hikes could soon slow.

Wall Street’s main indexes had come under pressure in recent days, with the S&P 500 shedding 3.6% since the beginning of December on expectations of a longer rate-hike cycle and downbeat economic views from some top company executives.

Such thinking had also weighed on the Nasdaq Composite (.IXIC), which had posted four straight losing sessions prior to Thursday’s advance on the tech-heavy index.

Stocks rose as investors cheered data showing the number of Americans filing claims for jobless benefits increased moderately last week, while unemployment rolls hit a 10-month high toward the end of November.

The report follows data last Friday that showed U.S. employers hired more workers than expected in November and increased wages, spurring fears that the Fed might stick to its aggressive stance to tame decades-high inflation.

Markets have been swayed by data releases in recent days, with investors lacking certainty ahead of Federal Reserve guidance next week on interest rates.

Such behavior means Friday’s producer price index and the University of Michigan’s consumer sentiment survey will likely dictate whether Wall Street can build on Thursday’s rally.

“The market has to adjust to the fact that we’re moving from a stimulus-based economy – both fiscal and monetary – into a fundamentals-based economy, and that’s what we’re grappling with right now,” said Wiley Angell, chief market strategist at Ziegler Capital Management.

The Dow Jones Industrial Average (.DJI) rose 183.56 points, or 0.55%, to close at 33,781.48; the S&P 500 (.SPX) gained 29.59 points, or 0.75%, to finish at 3,963.51; and the Nasdaq Composite (.IXIC) added 123.45 points, or 1.13%, at 11,082.00.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 7, 2022. REUTERS/Brendan McDermid

Nine of the 11 major S&P 500 sectors rose, led by a 1.6% gain in technology stocks (.SPLRCT).

Most mega-cap technology and growth stocks gained. Apple Inc (AAPL.O), Nvidia Corp (NVDA.O) and Amazon.com Inc (AMZN.O) rose between 1.2% and 6.5%.

Microsoft Corp (MSFT.O) ended 1.2% higher, despite giving up some intraday gains after the Federal Trade Commission filed a complaint aimed at blocking the tech giant’s $69 billion bid to buy Activision Blizzard Inc . The “Call of Duty” games maker closed 1.5% lower.

The energy index (.SPNY) was an exception, slipping 0.5%, despite Exxon Mobil Corp (XOM.N) gaining 0.7% after announcing it would expand its $30-billion share repurchase program. The sector had been under pressure in recent sessions as commodity prices slipped: U.S. crude is now hovering near its level at the start of 2022.

Meanwhile, Moderna Inc (MRNA.O) advanced 3.2% after the U.S. Food and Drug Administration authorized COVID-19 shots from the vaccine maker that target both the original coronavirus and Omicron sub-variants for use in children as young as six months old.

The regulator also approved similar guidance for fellow COVID vaccine maker Pfizer Inc (PFE.N), which rose 3.1%, and its partner BioNTech, whose U.S.-listed shares gained 5.6%.

Rent the Runway Inc (RENT.O) posted its biggest ever one-day gain, jumping 74.3%, after the clothing rental firm raised its 2022 revenue forecast.

Volume on U.S. exchanges was 10.07 billion shares, compared with the 10.90 billion average for the full session over the last 20 trading days.

The S&P 500 posted 15 new 52-week highs and three new lows; the Nasdaq Composite recorded 82 new highs and 232 new lows.

Reporting by Shubham Batra, Ankika Biswas, Johann M Cherian in Bengaluru and David French in New York; Editing by Vinay Dwivedi, Sriraj Kalluvila, Anil D’Silva and Richard Chang

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Business

S&P, Nasdaq extend losing streaks amid rising recession worries

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  • Apple down after Morgan Stanley cuts Dec shipment target
  • Tesla falls on production loss worries
  • Carvana records worst-ever daily drop
  • Indexes: Dow flat, S&P down 0.19%, Nasdaq 0.51%

Dec 7 (Reuters) – The S&P 500 and Nasdaq closed down on Wednesday after a choppy session on Wall Street, as investors struggled to grasp a clear direction as they weighed how the Federal Reserve’s monetary policy tightening might feed through into corporate America.

For the benchmark S&P 500 (.SPX), it was the fifth straight session that it has declined, while the Nasdaq (.IXIC) finished down for the fourth time in a row. The Dow snapped a two-session losing streak, as it ended unchanged from the previous day.

The Nasdaq was dragged down by a 1.4% drop in Apple Inc (AAPL.O) on Morgan Stanley’s iPhone shipment target cut and a 3.2% fall in Tesla Inc (.IXIC) over production loss worries.

Markets have also been rattled by downbeat comments from top executives at Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N) and Bank of America Corp (BAC.N) on Tuesday that a mild to more pronounced recession was likely ahead.

Fears that the U.S. central bank might stick to a longer rate-hike cycle have intensified recently in the wake of strong jobs and service-sector reports.

More economic data, including weekly jobless claims, producer price index and the University of Michigan’s consumer sentiment survey this week, will be on the watch list for clues on what to expect from the Fed on Dec. 14.

“It feels like we’re in this very uncertain period where investors are trying to ascertain what’s more important, as policymakers are slowing down on rates but the data is not playing ball,” said Craig Erlam, senior market analyst at OANDA.

“The market is trying to balance the headwinds and the tailwinds and this is causing some confusion.”

The CBOE volatility index (.VIX), also known as Wall Street’s fear gauge, closed at 22.68, its highest finish since Nov. 18.

[1/2] Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 29, 2022. REUTERS/Brendan McDermid

Money market participants see a 91% chance that the Fed will increase its key benchmark rate by 50 basis points in December to 4.25%-4.50%, with rates peaking in May 2023 at 4.93%.

The S&P 500 (.SPX) lost 7.34 points, or 0.19%, to close at 3,933.92 and the Nasdaq Composite (.IXIC) dropped 56.34 points, or 0.51%, to finish at 10,958.55. The Dow Jones Industrial Average (.DJI) was flat, ending on 33,597.92.

Concerns about a steep rise in borrowing costs have boosted the dollar, but dented demand for risk assets such as equities this year. The S&P 500 is on track to snap a three-year winning streak.

Three of the 11 major S&P sector indexes were higher, with healthcare (.SPXHC) one of them. Technology (.SPLRCT) and communication services (.SPLRCL), down 0.5 and 0.9% respectively, were the worst performers.

Energy (.SPNY) fell for its fifth straight session. The sector’s performance was weighed by U.S. crude prices falling again, settling at the lowest level in 2022, as concerns over the outlook for global growth wiped out all of the gains since Russia’s invasion of Ukraine exacerbated the worst global energy supply crisis in decades.

Carvana Co (CVNA.N) had its worst day as a public company, losing nearly half its stock value, after Wedbush downgraded the used-car retailer’s stock to “underperform” from “neutral” and slashed its price target to $1.

Meanwhile, United Airlines (UAL.O) traded 4.1% lower. Unions representing various workers at the airline said they would join forces on contract negotiations.

Travel-related stocks were generally down. Delta Air Lines (DAL.N) and American Airlines Group (AAL.O) were 4.4% and 5.4% lower respectively, with cruise line operators Carnival Corp (CCL.N) and Norwegian Cruise Line Holdings (NCLH.N) and accommodation-linked Airbnb Inc (ABNB.O) and Booking Holdings (BKNG.O) all falling between 1.7% and 4.4%.

Volume on U.S. exchanges was 10.29 billion shares, compared with the 10.98 billion average for the full session over the last 20 trading days.

The S&P 500 posted seven new 52-week highs and seven new lows; the Nasdaq Composite recorded 61 new highs and 307 new lows.

Reporting by Shubham Batra, Ankika Biswas, Johann M Cherian and Shashwat Chauhan in Bengaluru and David French in New York; Editing by Vinay Dwivedi, Shounak Dasgupta and Lisa Shumaker

Our Standards: The Thomson Reuters Trust Principles.

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