S&P +74 to 4311, impressive rally !
briefing -
Stocks are having a strong showing today, helped by falling interest rates, positive earnings news, and short covering activity. The major indices are trading up more than 1.0%, which has the S&P 500 above its 200-day moving average (4,244) and oscillating around the 4,300 level.
The 10-yr note yield is down nine basis points from yesterday at 4.68%. It had been down as low as 4.63% earlier. The activity in Treasuries has been aided by some softening manufacturing PMI data out of the eurozone, the Bank of England's decision to keep its Bank Rate unchanged at 5.25%, some short-covering activity in the Treasury market as well, and the Q3 productivity report showing a 0.8% decline unit labor costs.
Gains are broad based with 28 of the 30 Dow components trading up and ten of the 11 S&P 500 sectors registering gains larger than 1.0%. The real estate (+3.4%) and energy (+2.4%) sectors lead the pack while the communication services sector (+0.7%) shows the slimmest gain.
Today's trade has been bolstered by the notion that the Fed could be done raising rates. That thinking has followed on the heels of remarks made yesterday by Fed Chair Powell at his press conference following the FOMC meeting.
A heavy batch of earnings news since yesterday's close has garnered mostly positive reactions, which has acted as additional support for stocks. Qualcomm (QCOM 117.45, +6.56, +5.9%), Eli Lilly (LLY 577.85, +23.65, +4.3%), and Starbucks (SBUX 101.41, +10.06, +11.0%) are winning standouts in that respect.
Meanwhile, Airbnb (ABNB 116.04, -3.34, -2.9%) and Moderna (MRNA 70.53, -5.69, -7.5%) are trading down after reporting earnings.
Another factor presumably working its way in today's trading mix is the seasonality factor. November, on average, has historically been the strongest month for the S&P 500 and marks the start of the best six month return period for the S&P 500.
Reviewing today's economic data:
Weekly Initial Claims 217K (Briefing.com consensus 214K); Prior was revised to 212K from 210K; Weekly Continuing Claims 1.818 mln; Prior was revised to 1.783 mln from 1.709 mln
The key takeaway from the report is much the same, which is to say the low level of initial claims isn't consistent with a material weakening in the labor market.
Q3 Productivity-Prel 4.7% (Briefing.com consensus 3.6%); Prior was revised to 3.6% from 3.5%; Q3 Unit Labor Costs-Prel -0.8% (Briefing.com consensus 1.5%); Prior was revised to 3.2% from 2.2%
The key takeaway from the report, other than the impressive uptick in productivity, is the decline in unit labor costs. It is a particularly timely piece of data, as it plays perfectly into the market's swelling expectation that moderating inflation pressures will keep the Fed from raising rates again.
September Factory Orders 2.8% (Briefing.com consensus 1.0%); Prior was revised to 1.0% from 1.2%
The key takeaway from the report is that factory orders in September were boosted nicely by strength in transportation orders, but the increase wasn't just a transportation story.
