NEW YORK: The S&P 500 and Nasdaq eked out small gains on Wednesday (Nov 8) to extend their recent winning streaks as investors weighed Federal Reserve (Fed) officials’ recent comments for signals on the path of interest rates and focused on the direction of Treasury yields.
The Dow Jones Industrial Average fell 40.33 points, or 0.12%, to 34,112.27; the S&P 500 gained 4.40 points, or 0.10 %, at 4,382.78; and the Nasdaq Composite added 10.56 points, or 0.08 %, at 13,650.41.
The Dow’s decline snapped a seven-session winning streak.
US Treasury yields have retreated sharply since the benchmark 10-year Treasury note topped 5% in late October, as comments from Fed officials and softer labour data led to growing expectations the central bank had reached the end of its rate-increase cycle.
That drop has helped fuel a stock rally that has given the S&P 500 and the Nasdaq their longest streak of gains in two years through Wednesday’s close at eight and nine sessions, respectively.
Markets are pricing in about a 50% chance of a rate cut of at least 25 basis points as soon as May, according to the CME Group’s FedWatch Tool, up from about 41% a week earlier.
Still, comments from several central bank officials over the past few days left the door open for additional increases, causing some uncertainty among investors.
“Everyone kind of knows we’re either going to get one more hike or they’re done and they’re probably done,” said Jason Ware, chief investment officer at Albion Financial Group.
“If we get a recession stocks have a different valuation, earnings look different. If we don’t then we’re probably in the context of a new early stage bull market here,” he said.
“That’s the question that investors are going to be asking themselves while watching yields – the information we get between now and the end of the year on yields and economic data as it relates to recession is going to drive the tape.”
Meanwhile, Fed chair Jerome Powell did not comment on monetary policy in opening remarks at the US central bank statistics conference on Wednesday. He is scheduled to speak at another conference on Thursday.
Longer-dated yields fell and the 10-year Treasury yield was down on the day after a US$40 billion auction analysts viewed as acceptable given the increased size.
Eli Lilly shares climbed 3.2% after the US Food and Drug Administration approved the drugmaker’s weight loss treatment.
In earnings, Warner Bros Discovery plunged 19% after the media and entertainment conglomerate said Hollywood strikes and a weak advertising market could hurt 2024 earnings, weighing on peer Paramount Global.
Electric vehicle maker Lucid Group stumbled 8.1% after trimming its production forecast. – Reuters
