Last Updated 4:00PM EST
Stock indices finished today’s trading session mixed. The S&P 500 and the Dow Jones Industrial Average fell 0.08% and 0.56%, respectively. On the other hand, the Nasdaq 100 gained 0.1%.
The financial sector was the session’s laggard, as it fell 0.61%. Conversely, the communications sector was the session’s leader, with a gain of 54%. In addition, WTI crude oil increased as it hovers around the mid-$81 range.
Furthermore, the U.S. 10-Year Treasury yield decreased to 3.51%, a decrease of more than 10 basis points. Similarly, the Two-Year Treasury yield also decreased, as it hovers around 4.24%.
The Atlanta Federal Reserve updated its latest GDPNow reading, which allows it to estimate GDP growth in real time. The “nowcast” becomes more accurate as more economic data is released throughout the quarter. Currently, it estimates that the economy will expand by about 2.8% in the fourth quarter.
This is lower than its previous estimate of 4.3%, which can be attributed to recent data released from the U.S. Census Bureau, the U.S. Bureau of Economic Analysis, and the Institute for Supply Management.
Nevertheless, inflation continues to be a problem around the world. Therefore, it’ll be interesting to see what the actual GDP growth will be and how it’ll change going forward as higher rates start to impact the economy.
Stocks Mixed in Volatile Trading
Last Updated 3:00PM EST
Stock indices are mixed heading into the final hour of today’s trading session. As of 3:00 p.m. EST, the S&P 500 and the Nasdaq 100 are up 0.1% and 0.4%, respectively. On the other hand, the Dow Jones Industrial Average is down 0.5%.
Earlier today, the Institute for Supply Management released its monthly report for the ISM Manufacturing Purchasing Managers’ Index, which measures the month-over-month change in production levels. A number over 50 represents an expansion, whereas anything below 50 means a contraction. The report came in at 49, which was lower than the expected 49.8.
It’s worth noting that this indicator is lower than last month’s reading of 50.2 and has been slowly downtrending ever since its peak in April 2021, when it hit a high of 64.7.
Furthermore, the ISM Manufacturing Employment report posted a reading of 48.4, meaning that manufacturing employment also contracted. However, it’s worth noting that manufacturing employment has contracted in five of the last seven months, suggesting that companies have already been anticipating a contraction in production levels.
Stocks Fall; PCE Beats Expectations
Last Updated 12:30PM EST
Stocks are in the red halfway into today’s trading session. As of 12:30PM EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.8%, 0.3%, and 0.1%, respectively.
On Thursday, the Bureau of Economic Analysis released its Core Personal Consumption Expenditure (PCE) Price Index for the month of October. Since this is the Fed’s preferred measure of inflation, it tends to have more influence over Jerome Powell’s decisions than the CPI does.
On a month-over-month basis, core PCE growth came in at 0.2%, which was lower than expectations of 0.3%. This is a good sign, as it’s in the 0.1% to 0.2% range that it consistently hovered around prior to the pandemic.
On a year-over-year basis, core PCE increased by 5%, which is lower than last month’s reading of 5.2% and is in line with estimates.
Nevertheless, core PCE doesn’t include food and energy prices. When including these two items, year-over-year PCE came in at 6%, which was lower than last month’s 6.3%.
In addition, regular PCE came in at 0.3% on a month-over-month basis. This was better than the 0.5% expected and the same as the previous report.
It’s good to see some improvement with today’s report. Still, it’s worth mentioning that this isn’t the first time inflation has come down this year. Indeed, inflation has tended to reaccelerate each time. Therefore, it may simply be a temporary pause that could resume.
In addition, the year-over-year numbers remain high, which means the Federal Reserve will likely continue tightening.
Indices Zigzag in Early Trading
Last Updated 11:00AM EST
Indices are mixed up today as markets put the Wednesday’s rally behind and look ahead to the Jobs report figures
The Dow Jones Industrial Average (DJIA), the S&P 500 (SPX) and the Nasdaq 100 (NDX) have changed -0.84%, -0.06%, and +0.2% respectively at 11.00 a.m. EST today.
Sentiments in the after-hours were also impacted by the news of Salesforce’s (NASDAQ:CRM) co-CEO Bret Taylor resigning from the post, and Snowflake’s (NYSE:SNOW) weak revenue guidance.
The regular trading Wednesday witnessed a rally that yanked the Dow out of the bear market territory. All the major averages clocked gains. The S&P500, the Dow, and the Nasdaq 100 closed 3.09%, 2.18%, and 4.58% higher, respectively.
Looking back at November, the S&P 500, the Dow, and the Nasdaq Composite (superset of the Nasdaq 100) were up 5.38%, 5.67%, and 4.37%, respectively.
Fed and China —Both to Ease Their Grips
In his speech at Brookings Institution on Wednesday, Powell said that although a pause or a pivot is not a possibility now, the Central Bank is likely to tone down the pace of the interest rate hikes. Investors were comforted by the comments and are now expecting a 50 basis-point hike to be announced at the next FOMC meeting, after four consecutive 75 basis-point hikes.
It should be kept in mind, though, that the inflation rate, even though cooler, is still far away from the Fed’s target of 2%-3%. Interest rates may be increased a few more times over the forthcoming months to achieve the target inflation rate. The Fed may loosen its grip a bit but not stop completely. Hence, the possibility of a monetary policy-induced recession is not completely off the table.
Another encouraging news that buoyed investor sentiments was the possible easing of China’s strict zero-COVID policy. The protests that started almost a week ago seemed to have achieved a bit of success, as the government body handling the pandemic assured that restrictions will be eased.
Economic Updates
ADP’s November payrolls report is expected to be released on Friday, and experts are looking at a slowed-down labor market this time. Compared to October’s job additions of 261,000, November seemed to have had 61,000 lesser private sector jobs added. Moreover, unemployment is expected to have remained steady at 3.7%.
The weekly jobless claims, due out on Thursday, will also give investors a look into the weekly trend in the labor market.
