The S&P 500 Index ($SPX) (SPY) Tuesday closed up +0.57%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.28%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.57%.
Stocks on Tuesday settled higher, with the S&P 500 and Dow Jones Industrials posting new all-time highs. Positive corporate news Tuesday lifted the broader market as JM Smucker rose more than +5% after reporting stronger-than-expected Q2 adjusted EPS and boosting its full-year adjusted EPS forecast. Also, Eli Lilly rose more than +4% after the Biden administration proposed a rule requiring the US government to cover weight-loss drugs through the Medicare and Medicaid systems. Stocks added to their gains Tuesday afternoon on an easing of Middle East tensions after President Biden said Israel and Hezbollah agreed to a cease-fire deal.
However, gains in stocks were limited after Trump posted on his Truth Social network that he would impose an additional 10% tariff on goods from China and 25% tariffs on all products from Mexico and Canada, promising to sign an executive order on his first day in office. Democrats responded by calling the tariffs an inflationary new sales tax on consumers.
Tuesday’s US economic news was mixed for stocks and Fed policy, with Nov consumer confidence climbing to a 16-month high and Oct new home sales falling more than expected to a nearly 2-year low.
The US Sep S&P CoreLogic composite-20 home price index eased to 4.57% y/y from +5.21% y/y in Aug, weaker than expectations of +4.70% and the smallest annual increase in a year.
US Oct new home sales fell -17.2% m/m to a nearly 2-year low of 610,000, weaker than expectations of 725,000.
The Conference Board US Nov consumer confidence index rose +2.1 to a 16-month high of 111.7, close to expectations of 111.8.
The US Nov Richmond Fed manufacturing outlook survey was unchanged at -14, weaker than expectations of an increase to -11.
The minutes of the Nov 6-7 FOMC meeting showed policymakers favored a gradual approach to interest rate cuts as "participants anticipated that if the data came in about as expected, with inflation continuing to move down sustainably to 2% and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time."
Hawkish comments Tuesday from San Francisco Fed President Daly were negative for stocks when she said, "Inflation is still printing above our 2% target, so we need to continue to work to bring that down."
The markets are discounting the chances at 67% for a -25 bp rate cut at the December 17-18 FOMC meeting.
Overseas stock markets on Tuesday settled lower. The Euro Stoxx 50 closed down -0.79%. China's Shanghai Composite Index closed down by -0.12%. Japan's Nikkei Stock 225 closed down -0.87%.
Interest Rates
December 10-year T-notes (ZNZ24) Tuesday closed down -6.5 ticks. The 10-year T-note yield rose +3.1 bp to 4.304%. Dec T-notes Tuesday were under pressure after President-elect Trump said he would sign an executive order on his first day in office to impose an additional 10% tariff on goods from China and 25% on all products from Mexico and Canada, which could boost consumer costs and stoke inflation. T-notes extended their losses on hawkish comments from San Francisco Fed President Daly, who said inflation is still above target and the Fed still needs to work on bringing it down. The minutes of the Nov-6-7 FOMC meeting were slightly hawkish for T-notes after policymakers said they favored a gradual approach to interest rate cuts.
T-notes recovered from their worst levels Tuesday on solid demand for the Treasury’s auction of $70 billion of 5-year T-notes with a bid-to-cover ratio of 2.43, above the 10-auction average of 2.38.
European government bond yields Tuesday were mixed. The 10-year German bund yield fell to a 5-week low of 2.186% and finished down -2.4 bp to 2.187%. The 10-year UK gilt yield rose +0.9 bp to 4.353%.
ECB Vice President Guindos said, "If the ECB's projections are confirmed, we will continue making our monetary policy stance less restrictive."
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 29% for a -50 bp rate cut at the same meeting.
US Stock Movers
NRG Energy (NRG) closed up more than +10% to lead gainers in the S&P 500 after Jeffries upgraded the stock to buy from hold with a price target of $113.
JM Smucker (SJM) closed up more than +5% after reporting Q2 adjusted EPS of $2.75, stronger than the consensus of $2.51, and boosting its full-year adjusted EPS forecast to $9.70-$101.10 from a previous forecast of $9.60-$10.00.
Eli Lilly (LLY) closed up more than +4% after the Biden administration proposed a rule requiring the US government to cover weight-loss drugs through the Medicare and Medicaid systems.
Semtech (SMTC) closed up more than +18% after reporting Q3 adjusted EPS of 26 cents, better than the consensus of 23 cents, and forecast Q4 adjusted EPS of 29 cents-35 cents, above the consensus of 27 cents.
Woodward (WWD) closed up more than +5% after reporting Q4 net sales of $854.5 million, stronger than the consensus of $811.2 million, and forecasting 2025 net sales of $3.30 billion-$3.50 billion, the midpoint above the consensus of $3.38 billion.
Allstate (ALL) closed up more than +3% after Pipe Sandler raised its price target on the stock to $244 from $206.
Charter Communications (CHTR) closed up more than +2% after BNP Paribas Exane upgraded the stock to neutral from underperform.
Chevron (CVX) closed up more than +1% after Citigroup upgraded the stock to buy from neutral with a price target of $185.
General Motors (GM) closed down more than -8%, and Ford Motor (F) closed down more than -2% after President-elect Trump vowed to impose additional 10% tariffs on goods from China and 25% tariffs on all products from Mexico and Canada. Both carmakers import vehicles from China to the US and have factories in Canada and Mexico.
Amgen (AMGN) closed down more than -4% to lead losers in the Dow Jones Industrials after reporting that patients in an experimental trial lost about 20% of their body weight from its experimental obesity shot, disappointing investors hoping the trial would produce more weight loss.
Best Buy (BBY) closed down more than -4% after reporting Q3 enterprise comparative sales fell -2.9%, weaker than the consensus of -0.92%, and lowered its full-year comparable sales forecast to 2.5% to -3.5% from a previous forecast of -1.5% to -3.0%.
Kohl’s (KSS) closed down more than -16% after reporting Q3 net sales of $3.51 billion, weaker than the consensus of $3.67 billion, and cutting its full-year comparable sales forecast to -6% to -7% from a previous forecast of -3% to -5%.
Zoom Video Communications (ZM) closed down more than -5% as better-than-expected Q3 results failed to match lofty expectations.
Intel (INTC) closed down more than -3% after Bloomberg reported that Qualcomm’s interest in pursuing an acquisition of Intel has cooled.
Burlington Stores (BURL) closed down more than -1% after reporting Q3 comparable sales rose +1%, weaker than the consensus of +2.19%, and lowered its full-year comparable sales forecast to +2% from a previous estimate of +2% to +3%, below the consensus of +2.77%
Earnings Reports (11/27/2024)
Anavex Life Sciences Corp (AVXL), Dakota Gold Corp (DC), Golden Ocean Group Ltd (GOGL), Immersion Corp (IMMR).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. More news from Barchart- 1 Quantum Computing Stock to Grab While It's Still Under $10
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