Stock Market Update

[BRIEFING.COM] The stock market was mixed at the index level today, though broader market sentiment was negative throughout the session. At the close, decliners outpaced advancers by a 2-to-1 ratio at the NYSE and a 3-to-2 margin at the Nasdaq.

The underlying negative bias stemmed largely from President-elect Trump's announcement that he plans to impose tariffs—an additional 10% on imports from China and 25% on goods from Mexico and Canada—on his first day in office, contingent upon halting migrant flows and the trafficking of fentanyl into the U.S.

Concerns over inflationary pressures were piqued by these comments, initially sending Treasury yields higher and adding pressure on equities. The 10-yr yield reached 4.32% earlier and the 2-yr yield was at 4.29% despite the sharp 17.3% month-over-month decline in new home sales for October and a notable drop in the November Consumer Confidence Report, which showed a 12-month inflation expectations reading of 4.9%—the lowest since March 2020 (though still elevated, it signals a trend in the right direction).

The bond market shook off its early fears, though, and yields settled below intraday highs. The 10-yr yield settled four basis points higher than yesterday at 4.30% and the 2-yr yield settled two basis points lower at 4.25%. The Treasury market was also reacting to the FOMC Minutes from the November 6-7 meeting, which didn't contain anything surprising, and a $70 billion 5-yr note offering that met solid demand.

Despite the negative skew in market breadth, the equity market also seemed to brush off some its early concerns. The S&P 500 (+0.6%), Nasdaq Composite (+0.6%), and Dow Jones Industrial Average (+0.3%) closed near their best levels of the day. The DJIA and S&P 500 also logged fresh record intraday highs. 

The Russell 2000 (-0.7%) and S&P Mid Cap 400 (-0.4%) closed lower, largely driven by profit-taking activity. The former is still 10.4% higher this month and the latter sits on a 9.0% gain.

On an individual basis, Dow component Amgen (AMGN 280.01, -13.99, -4.8%) garnered some negative attention after disappointing news from its Phase 2 trial update for the weight-loss drug MariTide.

Other story stocks included retailers that reported earnings like Best Buy (BBY 88.48, -4.55, -4.9%), Kohl's (KSS 15.22, -3.12, -17.0%), Abercrombie & Fitch (ANF 146.62, -7.88, -5.1%), and Dick's Sporting Goods (DKS 212.22, -3.01, -1.4%).

• Nasdaq Composite: +27.7%
• S&P 500: +26.4%
• S&P Midcap 400: +21.4%
• Russell 2000: +19.6%
• Dow Jones Industrial Average: +19.0%

Reviewing today's economic data:

• September FHFA Housing Price Index 0.7%; Prior was revised to 0.4% from 0.3%
• September S&P Case-Shiller Home Price Index 4.6% (Briefing.com consensus 4.7%); Prior 5.2%
• November Consumer Confidence 111.7 (Briefing.com consensus 113.0); Prior was revised to 109.6 from 108.7
  • The key takeaway from the report is that consumers' view of the present situation picked up nicely, particularly as it relates to the labor market. That is noteworthy because, if consumers feel good about job security and/or their ability to find a new job, they are apt to keep spending freely on discretionary goods/services.
• October New Home Sales 610K (Briefing.com consensus 718K); Prior 738K
  • The key takeaway from the report is that new home sales, which are tabulated when contracts are signed, dropped sharply in October as mortgage rates rose sharply in the wake of the Fed's first rate cut in September. The effects of the hurricanes were also likely to blame for the extra weakness seen in the South, which is the nation's biggest region for new home sales.

Looking ahead, Wednesday's calendar features a big batch of economic data due to the market holiday this week. The lineup features: 

• 7:00 ET: Weekly MBA Mortgage Index (prior 1.7%)
• 8:30 ET: October Personal Income (Briefing.com consensus 0.3%; prior 0.3%), Personal Spending (Briefing.com consensus 0.2%; prior 0.5%), PCE Prices (Briefing.com consensus 0.2%; prior 0.2%), Core PCE Prices (Briefing.com consensus 0.3%; prior 0.3%), Q3 GDP -- second estimate (Briefing.com consensus 2.8%; prior 2.8%), Q3 GDP Deflator -- second estimate (Briefing.com consensus 1.8%; prior 1.8%), October Durable Orders (Briefing.com consensus 0.4%; prior -0.8%), Durable Orders ex-transportation (Briefing.com consensus 0.3%; prior 0.4%), October advance goods trade balance (prior -$108.2 bln), advance Retail Inventories (prior 0.8%), Advance Wholesale Inventories (prior -0.1%), weekly Initial Claims (Briefing.com consensus 217,000; prior 213,000), and Continuing Claims (prior 1.908 mln)
• 10:00 ET: October Pending Home Sales (Briefing.com consensus -1.5%; prior 7.4%)
• 10:30 ET: Weekly crude oil inventories (prior +0.545 mln)
• 12:00 ET: Weekly natural gas inventories (prior -3 bcf)