U.S. stock indexes rose Wednesday, as they look to recapture some of the ugly losses accumulated over the past two sessions on the back of a persistent rout in once-highflying tech stocks and declines in oil.
U.S. financial markets will be closed Thursday for the Thanksgiving Day holiday and see an early close Friday.
How are benchmarks performing?
The Dow Jones Industrial Average DJIA, +0.67% rose 176 points, or 0.7%, to 24,642. The S&P 500 SPX, +0.87% advanced 26 points, or 1%, to 2,667, while The Nasdaq Composite Index NQZ8, +1.45% gained 112 points to reach 7,021, a rise of 1.6%.
Tuesday’s decline erased year-to-date gains for both the Dow and S&P 500, while the Nasdaq now clings to a 1.1% advance for 2018. Month to date, the Nasdaq has fallen 3.9%, the S&P has slid 1.6%, and the Dow has retreated 1.9% in November.
Read: Why share buybacks aren’t the stock market’s safety net
According to Dow Jones Market Data, the Monday-to-Tuesday descent for the S&P 500 and Dow mark their worst starts to the Thanksgiving week since 1973, and the steepest for the Nasdaq since 2000.
What’s driving the market?
U.S. investors were hoping for a respite to counter the worst start to Thanksgiving week in 45 years, with fears about valuations of technology and internet-related stocks, sluggish growth, policy errors by the Federal Reserve and uncertainty about trade relations between the U.S. and China swirling in investors’ minds.
Contributing some early upward momentum to the energy sector were gains in crude-oil prices, with data released Tuesday momentarily alleviating growing worries about global oversupply, which has driven U.S. benchmark oil CLF9, +2.83% deep into bear-market territory, defined as a decline of a at least 20% from a recent peak.
New data on orders for American-manufactured goods were released before the bell Wednesday, showing the largest decline in durable-goods orders in 15 months. More important, the report from Census Bureau showed orders for capital goods falling for the third month in a row, adding to fears that U.S. business investment is decelerating.
Investors also received some good news on the housing front, as existing-home sales rose for the first time in six months. That’s after a series of reports of the housing market has reinforced the view that increases to benchmark interest rates are eroding confidence in the housing industry.
What are strategists saying?
“Today is clearly about buying on the recent weakness,” Kevin Divney, senior portfolio manager at Russell Investments, told MarketWatch.
“We don’t see a broad, systemic reason why the market has been selling off, and so we expect to continue to see stock-specific buyers out there, taking advantage of compressed valuations,” he said.
Going forward, Divney sees data released by companies like Amazon on vacation sales figures as a potential catalyst for the return of more positive sentiment. “Holiday sales growth above 5% would be encouraging,” he said.
“I know better than to declare bottoms in markets,” Tom Essaye, president of the Sevens Report, wrote in a note to clients. “But yesterday had some of what we look for when trying to identify selling capitulation, including: an initial morning plunge that market the low for the day, stabilization of recent laggards, and a lack of a spike in the VIX.”
“America’s battered equity markets are limping towards the Thanksgiving holiday with precious little to be thankful for,” wrote J.R. Zhou, chief market strategist at broker Infinox, in a Wednesday note.
He said the realization that the strength of America’s domestic economy is being rendered increasingly irrelevant by the continued weakness of its trading partners, and fears that “the Federal Reserve’s hawks risk becoming an albatross” are weighing on market sentiment and contributing to volatile markets.
Which data are in focus?
New applications for unemployment benefits rose to 224,000 for the week ended Nov. 17, the highest reading in more than four months. Orders for U.S.-manufactured durable goods fell by 4.4% in October, the largest decline in 15 months, and below expectations for a 3.4% decline, per a MarketWatch survey of economists. The report also showed orders for “core” capital orders falling slightly, further signaling a slowing in business investment. Existing-home sales rose for the first time in six months, at a seasonally adjusted annual rate of 5.22 million in October, up 1.4% from September. The University of Michigan’s consumer-sentiment index fell to 97.5 in November from 98.6 in October, missing Wall Street expectations a 98.3 reading. The Conference Board’s gauge of leading economic indicators rose by 0.1% in October, in line with expectations.What stock are in focus
Deere & Co. DE, +3.21% shares are rising Wednesday, even after the farm-equipment maker reported disappointing quarterly profits. Shares were up 4.5% in morning trade, though the stock remains down more than 6% year-to-date.
Shares of Footlocker Inc. FL, +14.85% are surging more than 16% Wednesday, following a Tuesday-evening earnings release that showed the company beating Wall Street estimates for third-quarter profits.
Autodesk Inc. ADSK, +9.61% stock is rising 9% Wednesday, after the company reported earnings, sales and outlook beats, Tuesday evening.
Shares of Mylan NV MYL, -2.42% traded lower Wednesday, one day after the FDA issued a warning letter summarizing violations of manufacturing regulations, related to its inspection of a facility in West Virginia. The stock is down 1.9%.
Growth technology stocks are rising Wednesday, during a month when these erstwhile market leaders have otherwise fallen sharply. Facebook Inc. FB, +3.20% shares are up 2.8%, Amazon Inc. AMZN, +2.23% was up 2%, and Microsoft Corp. MSFT, +2.23% shares are 2.6% higher.
Shares of Best Buy Co., Inc. are continuing their yearlong slide on Wednesday, as earnings and revenue beats announced yesterday couldn’t prevent Credit Suisse and Raymond James analysts lowering their price targets for the big-box retailer. The stock is down 3.1% Wednesday and is more than 10% lower on the year.
How are other markets trading?
Asian markets traded mixed Wednesday, with most of the region’s major indexes recovering from session lows into the close. Japan’s Nikkei NIK, -0.35% fell by 0.4%, while Australia’s ASX XJO, -0.51% fell by 0.5%. Hong Kong’s Hang Seng Index HSI, +0.51% recovered from early losses to end the day up 0.5%, while China’s Shanghai Composite Index SHCOMP, +0.21% edged 0.2% higher.
European markets ended the trading day broadly higher, with the Stoxx Europe 600 SXXP, +1.14% rising 1% and the FTSE 100 UKX, +1.47% up 1.5%.
Crude oil CLF9, +2.83% is staging a relief rally Wednesday, up 3.5% during a November where its price has fallen more than 15%. Gold prices GCZ8, +0.55% were edging up 0.5%, while the U.S. dollar DXY, -0.15% is virtually unchanged.
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