Stock Market Update

[BRIEFING.COM] The S&P 500 advanced 36 points to a fresh record high, the Nasdaq Composite jumped 1.3% to a new all-time high, and the Dow Jones Industrial Average closed above 45,000 for the first time. The solid showing followed strong earnings results from Dow component Salesforce (CRM 367.87, +36.44, +11.0%) and upbeat comments about its Agentforce AI system for enterprises, which reignited enthusiasm in the AI sector. 

Mega-cap stocks and semiconductor-related shares led the charge today. These stocks benefitted from the renewed AI optimism, as well as the continuation of positive momentum after a strong week. The Vanguard Mega Cap Growth ETF (MGK) closed 1.6% higher today and has gained 3.1% this week. The PHLX Semiconductor Index (SOX) was up 1.7% for the session and has surged 4.0% since last Friday.

Earnings results and guidance from other companies like Marvell (MRVL 118.15, +22.24, +23.2%), Okta (OKTA 86.11, +4.40, +5.4%), Pure Storage (PSTG 65.35, +11.81, +22.1%), and Dollar Tree Stores (DLTR 73.83, +1.35, +1.9%) garnered positive responses from investors, providing added support to the broader equity market. 

A drop in market rates also contributed to the upside bias in stocks. The 10-yr yield dropped four basis points to 4.18% and the 2-yr yield dropped five basis points to 4.12%. The move in Treasuries followed weaker-than-expected economic data, including the ADP Employment Change and the ISM Service PMI for November. These reinforced the market’s expectation that the Federal Reserve will cut rates by 25 basis points at its December 17-18 meeting.

Strength in some of the aforementioned stocks propelled the S&P 500 information technology sector (+1.8%) to the top of the leaderboard among the 11 sectors. On the flip side, the energy sector registered the largest decline by a wide margin, dropping 2.5% amid falling oil prices ($68.60/bbl, -1.37, -2.0%).

Market participants received the Fed's November Beige Book and comments from Fed Chair Jerome Powell at the NYT DealBook Conference, but stocks didn't react much. 

During his remarks, Chair Powell expressed confidence in the U.S. economy, pointing to its strong performance, low unemployment, and progress on inflation. He emphasized the Fed's cautious approach to monetary policy, seeking to balance inflation control with labor market stability. Powell also reiterated the Fed's independence and affirmed the continuity of its relationship with the Treasury under the new administration. Turning to the Beige Book, the report indicated a slight rise in economic activity across most Federal Reserve Districts.

• Nasdaq Composite: +31.5%
• S&P 500: +27.6%
• S&P Midcap 400: +20.7%
• Russell 2000: +19.7%
• Dow Jones Industrial Average: +19.4%

Reviewing today's economic data: 

• Weekly MBA Mortgage Applications Index 2.8% vs Briefing.com consensus of ; Prior was revised to 6.3% from
• November ADP Employment Change 146K (Briefing.com consensus 170K); Prior was revised to 184K from 233K
• November S&P Global US Services PMI - Final 56.1; Prior 55.0
• November ISM Non-Manufacturing Index 52.1% (Briefing.com consensus 55.5%); Prior 56.0%
  • The key takeaway from the report is that tariff concerns were mentioned often among respondents considering their outlooks.
• October Factory Orders 0.2%; Prior was revised to -0.2% from -0.5%
  • The key takeaway from the report is that factory orders picked up following declines in the previous two months.

Looking ahead, Thursday's economic data includes:

• 8:30 ET: Weekly Initial Claims (Briefing.com consensus 213,000; prior 213,000), Continuing Claims (prior 1.907 mln), and October Trade Balance (Briefing.com consensus -$75.1 bln; prior -$84.4 bln)
• 10:00 ET: October Factory Orders (prior -0.5%)
• 10:30 ET: Weekly natural gas inventories (prior -2 bcf)