Page One
Briefing.com Summary:
*The buy-the-dip crowd was active on Monday but is lethargic so far today.
*The S&P 500 and Nasdaq Composite are trading near a key technical level.
*The September PPI and Retail Sales reports provided a mixed bag of data for Fed officials.
There was no question that the buy-the-dip crowd was back on Monday. The Nasdaq 100 saw its best day since May; the Philadelphia Semiconductor Index surged 4.6%, paced by an 11% gain in Broadcom (AVGO), and lo and behold, the probability of a 25-basis-point cut at the December FOMC meeting topped 80%, according to the CME FedWatch Tool, after sliding below 40% less than a week ago.
The S&P 500 and Nasdaq Composite, for their part, briefly traded above their 50-day moving averages. If there was one blemish on yesterday's session, it was that they could not sustain that position on a closing basis.
They'll try again today, taking in the news that Ukraine has agreed to a peace deal brokered by President Trump, although Russia has yet to agree, according to CBS News, and that allies of Fed Chair Powell are laying the groundwork for a December rate cut, according to The Wall Street Journal.
Oil prices ($57.94, -0.90, -1.5%) are sliding on the peace deal headlines, which is helping the inflation argument of the doves at the Fed. We're not too sure about the September Producer Price Index since it was a bit of a mixed bag. If anything, it was the kind of report that will keep the debate going among Fed officials as to whether a rate cut is needed in December.
The Producer Price Index for final demand increased 0.3% month-over-month in September (Briefing.com consensus: 0.3%) following a 0.1% decline in August. That left the year-over-year change at 2.7% versus 2.6% in August. The Producer Price Index for final demand, less foods and energy, increased just 0.1% month-over-month (Briefing.com consensus: 0.2%) following a 0.1% decline in August. That left the year-over-year change at 2.6% versus 2.8% in August.
The key takeaway from the report is that inflation at the wholesale level is still sticky, highlighted by a 1.1% month-over-month increase in the final demand foods index, which was up 4.0% year-over-year, shedding light on why many consumers, seeing the pass-through at grocery stores, are not aligned with the thinking that inflation is being brought under control.
Separately, retail sales were up 0.2% month-over-month in September (Briefing.com consensus 0.4%) after increasing 0.6% in August. Excluding autos, retail sales were up 0.3%, as expected, following a downwardly revised 0.6% increase (from 0.7%) in August.
The key takeaway is that gasoline station sales were a big driver of the monthly increase. Excluding gasoline station sales, retail sales were flat in September after increasing 0.6% in August, signaling a slowdown in consumer spending on goods.
The latter could be construed as a basis to support a rate cut in December, but again, it is not a clear-cut signal, knowing that retail sales were strong in June (+1.0%) and July (+0.6%), so this could simply be some normal slowing after a burst of increased spending activity in the summer months.
The market took in these reports, cognizant that they are also "dated" at this juncture. Earnings reports from several retailers today didn't trigger too many spending alarm bells. Dick's Sporting Goods (DKS), Best Buy (BBY), Abercrombie & Fitch (ANF), and Burlington Stores (BURL) all posted year-over-year revenue increases.
Kohl's (KSS) did not, but ironically it is the biggest gainer, up 27% in pre-market action on some short-covering activity, after issuing above-consensus FY26 guidance.
Currently, the S&P 500 futures are down four points and are trading fractionally below fair value, the Nasdaq 100 futures are down 71 points and are trading 0.3% below fair value, and the Dow Jones Industrial Average futures are up 30 points and are trading 0.1% above fair value.
Those indications don't convey a lot of conviction on the part of buyers or sellers, which may be a reflection of technical constraint given the proximity to key moving averages. At the same time, they reflect some offset in the mega-cap space, where the action is mixed, featuring a 4.5% decline in NVIDIA (NVDA) and a 3.9% gain in Alphabet (GOOG/GOOGL) on reports Meta Platforms (META) will use Google's AI chips.
Those stocks will be watched closely today, as will the AI trade, the results of the $70 billion 5-yr note auction at 1:00 p.m. ET, and Sandisk (SNDK), which is being added to the open prior to the start of trading on November 28.
