The U.S. stock market exhibited a mixed performance today, with the S&P 500 Index rising by 0.06% and the Dow Jones Industrial Average gaining 0.62%, while the Nasdaq 100 Index fell by 0.60%. The activity in stock markets comes as they begin to retract some of the gains seen in Monday’s significant rally. Futures for December E-mini S&P are slightly up by 0.04%, while December E-mini Nasdaq futures have declined by 0.64%.
The downturn in tech stocks was notably influenced by Nvidia, which saw its shares plummet over 5%. This decline was attributed to a report from The Information regarding potential talks between Meta Platforms and Google, implying a significant investment in Google’s AI chips for future data centers. This development suggests that Google may be making strategic inroads to compete with Nvidia’s leading position in AI accelerators.
In a larger context, recent economic data has played a critical role in market movements. Weak economic indicators, such as retail sales and a decline in the consumer confidence index, have resulted in decreased bond yields, further strengthening speculation for a potential interest rate cut by the Federal Reserve at its upcoming FOMC meeting in December. U.S. retail sales for September rose by only 0.2%, falling short of the projected 0.4%, and private payrolls reported a decline of 13,500 in the four weeks ending November 8.
Additionally, the September PPI final demand rose 2.7% year-on-year, slightly exceeding expectations, while the core PPI showed a lower-than-expected increase. The Conference Board’s consumer confidence index fell to its lowest point in seven months, signaling heightened caution among consumers. This set of data has shifted market sentiment toward a more dovish outlook for monetary policy, with an estimated 80% likelihood of a 25 basis point rate cut by the Fed in December.
International markets showed positive trends, with European and Asian stocks up, indicating a broader global optimism in contrast to the mixed U.S. performance. The Euro Stoxx 50 index was up by 0.58%, and Shanghai Composite in China closed up 0.87%.
In the fixed income space, Treasury yields have dipped, with the 10-year T-note yield reaching a 3.5-week low of 4.00%. The recent auctions and economic data contributed to a bullish environment for Treasury notes, while European government bond yields also trended downward.
Among individual stock movements, the trend varied significantly. Companies such as Builders FirstSource and DR Horton benefited from the drop in T-note yields, seeing gains over 5%. Conversely, Nvidia’s decline led to weakness in other chip manufacturers, affecting Advanced Micro Devices and others in the sector.
On a brighter note, several companies such as Symbotic and Kohl’s reported significant earnings growth and positive sales outlooks, which helped lift their stock prices considerably.
As the earnings season nears its end, with 83% of S&P 500 companies exceeding expectations, there is a cautiously optimistic outlook for corporate performance reflecting resilience amid economic headwinds. Investors will be keenly observing upcoming economic indicators and earnings reports to gauge future market direction.