Miguel Santiago
U.S. stocks rose on Wednesday, helped by a rally in mega-cap technology stocks. Meanwhile, Treasury yields rose sharply after economic data showed a rise in inflation expectations.
The tech-heavy Nasdaq Composite (IND COMP.) led gains among Wall The main street averages, up 0.57% at 14,281.25 points at noon. The index was powered by Microsoft (MSFT) which advanced after the latest development of the OpenAI saga saw Sam Altman coming back as top boss. Amazon (AMZN) also won before Black Friday.
The S&P 500 Benchmark Index (SP500) added 0.42% to 4,557.42 points, while the leading Dow (dji) rose 0.57% at 35,287.99 points. The former has seen a sustained rally in November due in large part to the general market consensus that the Federal Reserve is done raising rates. Bank of America and RBC Capital Markets have forecast an all-time high of potentially 5,000 points for the index next year. The S&P’s all-time intraday high was 4,818.82 points in January 2022.
Of the 11 S&P sectors, nine were in green, led by Communication Services.
Energy was the biggest loser as WTI crude oil futures (CL1:COM) fell nearly 4% amid rising inventories and the delay of the OPEC+ meeting as discussions over oil levels production reached a stalemate with Saudi Arabia.
“We do not see the rescheduling of the next meeting as a sign of disagreement. OPEC stocks are typically forward-looking and have proven successful in managing downside volatility in the past. We believe Saudi Arabia has flexibility to make further cuts if necessary,” said JPMorgan’s Christyan Malek.
Traders received a series of economic data on Wednesday ahead of the Thanksgiving holiday. Ahead of the opening bell, Durable Goods Orders for October came in at -5.4% MoM vs. consensus of -3.2%. At the same time, the number of Americans filing initial unemployment claims last week fell to 209,000 compared to the expected figure of 225,000.
After the start of regular trading, the University of Michigan’s final reading on consumer confidence in November rose to 61.3 from a previous estimate of 60.4, but still below October’s 63.8. In addition, inflation expectations for next year increased to 4.5%.
Treasury yields rose sharply after the inflation data. The 30-year yield (US30Y) fell 3 basis points to 4.55%, while the 10-year yield (US10Y) rose marginally to 4.43%. The more rate-sensitive short-term 2-year yield (US2Y) rose 5 basis points to 4.93%.
See live data on how Treasury yields are performing across the curve on the Seeking Alpha bonds page.
Turning to third-quarter earnings season, Nvidia (NVDA) was one of the last big companies to report its results after hours on Tuesday. The chip giant again delivered impressive numbers and guidance, and attracted more praise from Wall Street. However, its shares fell more than 3% and were among the S&P’s top percentage losers.
“While the overwhelming majority of third-quarter earnings season is now firmly in the rearview mirror with 95% of S&P 500 companies and 92% of Stoxx 600 companies having reported, last night there was one last big Hooray with Nvidia’s (NVDA) Q3 release “Expectations simply may have been greatly exaggerated for a stock that’s up more than 240% year to date,” said Deutsche Bank’s Jim Reid.
In other earnings-related moves, Deere (DE) was also among the S&P’s top percentage losers after the farm machinery giant said its earnings next year would likely decline.
By contrast, HP (HPQ) was among the S&P’s top percentage gainers, having reversed course from a premarket decline driven by a quarterly revenue miss.
