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The Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 closed at record highs yesterday and there is little inclination at the moment to cede that high ground.
Currently, the S&P 500 futures are down three points and are trading fractionally below fair value, the Nasdaq 100 futures are down 14 points and are trading fractionally below fair value, and the Dow Jones Industrial Average futures are down 52 points and are trading 0.1% below fair value.
Altogether it is another show of resilience for a stock market that has been amazingly resilient all year and certainly since the election. Yesterday, in fact, marked the eleventh gain for the S&P 500 out of the past twelve sessions.
The resilience to selling interest at the index level has been underwritten this morning by modest gains in the mega-cap stocks, which have sprung back to life this week. Entering today, the Vanguard Mega-Cap Growth ETF is up 3.1%.
The leadership of the mega-cap stocks has ferried the market cap-weighted S&P 500 to a 0.9% gain over the last three sessions, whereas the equal-weighted S&P 500 is down 0.7%.
Stocks, arguably, aren't in focus as much this morning as Bitcoin, which has topped $100,000. That move is stirring animal spirits, and while the equity futures market doesn't necessarily corroborate that statement, it is safe to say that Bitcoin moving above $100,000 is emblematic of the animal spirits that have stirred since the election and which have left participants reluctant to sell stocks (or Bitcoin for that matter) with any conviction.
There has been a fair bit of news since yesterday's close.
- Earnings results from retailers American Eagle Outfitters (AEO) and Five Below (FIVE) that have been met with disparate reactions. AEO is down 14% and FIVE is up 14%.
- OPEC+ announced that it will extend the additional voluntary adjustments of 2.2 million barrels per day, announced in November 2023, until the end of March 2025.
- Walt Disney (DIS) declared a cash dividend of $1.00 per share that will be paid in two installments of $0.50 per share.
- Southwest Air (LUV) said its Q4 unit revenue will be up 5.5-7% yr/yr (up from prior 3.5-5.5%) with capacity down approximately 4%, and that it intends to launch an additional $750 mln accelerated share repurchase program.
This morning's economic data was a mixed bag with weekly initial jobless claims being higher than expected and the October trade deficit being narrower than expected.
Specifically, initial jobless claims for the week ending November 30 increased by 9,000 to 224,000 (Briefing.com consensus 213,000) and continuing jobless claims for the week ending November 23 decreased by 25,000 to 1.871 million.
The key takeaway from the report is that the totality of the report isn't signaling any major changes with respect to labor market trends, which have connoted some softening but no real breakage on the employment front.
The October trade deficit narrowed to $73.8 billion (Briefing.com consensus -$75.1 billion) from an upwardly revised $83.8 billion (from -$84.4 billion) in September. The improvement results from exports being $4.3 billion less than September exports and imports being $14.3 billion less than September imports.
The key takeaway from the report is that it reflects overall weakness in global trade activity in October.
The Treasury market has seen some seesaw action in the early going with yields currently back on their highs of the morning. The 2-yr note yield is up six basis points to 4.18% and the 10-yr note yield is up four basis points to 4.22%.
