Stock Market Update – Stocks Finish Lower as Treasury Yields Increase

Last Updated 4:00 PM EST

Stock indices finished today’s trading session in the red. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 fell 0.02%, 0.3%, and 0.19%, respectively.

The utilities sector was the session’s laggard, as it fell 1.72%. Conversely, the energy sector was the session’s leader, with a gain of 0.26%. In addition, WTI crude oil fell as it hovers around the high-$81 range.

Furthermore, the U.S. 10-Year Treasury yield increased to 3.77%, an increase of more than eight basis points. Similarly, the Two-Year Treasury yield also increased, as it hovers around 4.45%.

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 4.2% in the fourth quarter.

This is higher than its previous estimate of 4.4%, which can be attributed to today’s housing starts report from the U.S. Census Bureau.

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.

Last Updated 3:00PM EST

Stock indices are in the red heading into the final hour of today’s trading session. As of 3:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.2%, 0.5%, and 0.4%, respectively. On Thursday, the Federal Reserve Bank of Philadelphia released its Manufacturing Index report, which measures the general business conditions in Philadelphia.

The report surveys approximately 250 manufacturers. A level above zero indicates improving conditions while a number below zero indicates the opposite.

For November, the report came in at -19.4 compared to the forecast of -6.2, meaning that conditions worsened much more than expected on a month-over-month basis. It’s worth mentioning that this is the third consecutive monthly decline and the fifth decline in the past six months.

Taking a look across the Atlantic, inflation continues to plague Europe. The European Union saw CPI and core CPI of 10.6% and 5%, respectively. This represents yet another month of accelerating inflation within the Eurozone.

As a result, it is still too early for investors to get excited about buying stocks despite the recent Euphoria in the market.

Stocks Fall; Initial Jobless Claims Beat Expectations

Last Updated 12:00PM EST

Stock indices are in the red halfway into today’s trading session. As of 12:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.1%, 0.5%, and 0.2%, respectively.

On Thursday, the Department of Labor released its Initial Jobless Claims report, which came in better than expected. In the past week, 222,000 people filed for unemployment insurance for the first time. Expectations were for 225,000 individuals.

When using the four-week average, initial jobless claims were 221,000, up from last week’s reading of 219,000. It’s worth noting that this figure has been in an overall uptrend since the end of September.

In addition, Continuing Jobless Claims, which measures the number of unemployed people who qualify for unemployment insurance, came in at 1.507 million. This was above the forecast of 1.5 million and higher than last week’s print of 1.494 million.

Continuing Jobless Claims are currently sitting near their lowest levels since 1970. Relatively speaking, this suggests that individuals aren’t struggling to find other jobs after being laid off.

However, it’ll be interesting to see what will happen going forward as the Federal Reserve’s tightening policy slowly begins taking effect.

Stocks Fall as Housing Data Sees Monthly Declines

Last Updated 10:00AM EST

Equity markets are in the red 30 minutes into today’s trading session. As of 10:00 a.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.9%, 1.3%, and 1.2%, respectively.

The Census Bureau released its U.S. Housing Starts report today, which measures the change in new residential buildings that began construction in the reported month on an annualized basis.

In October, housing starts came in at 1.425 million versus expectations of 1.41 million. On a month-over-month basis, housing starts fell by 4.2%. This follows a 1.3% drop in last month’s report.

Furthermore, U.S. Building Permits also beat expectations, with a print of 1.526 million compared to the forecast of 1.512 million. This was a slight decrease from the prior month’s report, which came in at 1.564 million, equating to a decrease of 2.4% month-over-month. Nonetheless, building permits are on an overall decline which began in March.

These declines are likely to continue as home builder sentiment falls due to higher building and financing costs.

Futures Down as Investors Mull Over Mixed Retail Earnings

First Published 6:26AM EST

Stock futures were in the red early on Thursday as investors digested mixed reports from leading retailers.

Futures on the Dow Jones Industrial Average (DJIA) lost 0.56%, while those on the S&P 500 (SPX) dipped 0.61%, as of 6.26 a.m. EST, Thursday. Meanwhile, the Nasdaq 100 (NDX) futures declined 0.63%.

Retailer Bath & Body Works (NYSE:BBWI) surged more than 23% in the pre-market trading hours after handily exceeding revenue and earnings-per-share expectations. Tech stalwart Cisco (NASDAQ:CSCO) also jumped more than 3% after posting solid earnings results.

However, after posting weak sales guidance for the holiday season before the market opened on Wednesday, shares of Target (NYSE:TGT) headed downward, ending the day with losses of 13%.

Wednesday was a dull day for the stock market, with the major indexes ending the day in the red. The S&P 500, the Dow, and the Nasdaq 100 closed 0.83%, 0.12%, and 1.45% lower.

Retail Earnings Reveal Consumer Behavior Trends

Target’s guidance revealed that consumers are expected to spend less during the holiday season due to inflation and also the lurking fear of a recession. Nonetheless, other retailers including Home Depot (NYSE:HD), Lowe’s (NYSE:LOW), and Walmart (NYSE:WMT) reported better-than-expected earnings earlier this week, explaining that they are not getting hit as hard as expected from inflation.

Retail earnings are not over yet, with Macy’s (NYSE:M) and Kohl’s (NYSE:KSS) reporting before the market opens and Gap (NYSE:GPS) after the closing bell.

It is important to mention here that retail sector performance is an important gauge for the Federal Reserve to chart out its policy path. Strong earnings and guidance from retailers indicate that consumers are handling inflation well as they are continuing spending.

However, a closer look will reveal that the trend of retail performance is more important to look at. Whether luxury retailers are gaining from higher sales or more affordable brands are doing so will tell us more about consumer behavior during inflationary times. Consumers of price-inelastic consumer goods may opt for cheaper options of the same goods.

The Fed is likely to keep track of these trends, and possibly continue hiking interest rates until spending on essentials shows signs of slowing.

That said, the target inflation rate is around 3%, a far cry from the current level of 7.7%. Thus, the chance of a pivot from the Fed might not be as close as investors may think.

Housing Prices Continue Downtrend

A lot is happening in the housing sector as well. It is no surprise that housing prices have fallen drastically ever since high mortgage rates finally burst the demand bubble. Recently, the Fed bank of Dallas warned that prices could fall by a further 20%. While this may pose a problem for homeowners, this might help the economy recover from inflation in the long run.

Against this backdrop, data for October’s housing starts and building permits will be out on Friday, giving us clarity on the situation of the housing market.

Interestingly, taking advantage of the low prices was JPMorgan (NYSE:JPM), which partnered with real estate investment company Haven Realty Capital to invest over $1 billion in the acquisition and development of new build-to-rent communities across the US. This will boost JPMorgan’s asset portfolio and will be of tremendous value in the long run after the housing market rebalances.

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