Market Update - November 25

Today's advance left the major indices near session highs at the closing bell with gains ranging from 0.5% to 1.1%. Today's action was spearheaded by the mega cap stocks, a dose of AI enthusiasm, a positive response to the $16 billion 20-yr bond auction, and ongoing buying activity in a seasonally strong period for the market. 

Microsoft (MSFT 377.44, +7.59, +2.1%), which benefitted from the news that it hired OpenAI's ex-CEO Sam Altman to lead its AI team, and AI chip leader NVIDIA (NVDA 504.19, +11.21, +2.3%), which reports earnings after Tuesday's close, were standout leaders today. Other semiconductor stocks came along for the ride and composed a valuable leadership group today as well. The Vanguard Mega Cap Growth ETF (MGK) rose 1.2% and the PHLX Semiconductor Index jumped 1.5%. 

The Invesco S&P 500 Equal Weight ETF (RSP) logged a modest 0.4% gain while the market-cap weighted S&P 500 rose 0.7%.

Volume was a bit lighter than average at the start of this holiday week, which will see the stock market closed on Thursday for Thanksgiving and close early at 1:00 p.m. ET on Friday.

Two of the S&P 500 sectors closed with modest declines while nine sectors finished higher. The information technology (+1.5%) and communication services (+1.1%) sectors led the pack thanks to strength in their respective mega cap constituents. The utilities sector (-0.3%) saw the "biggest" decline.

The energy sector was a relative underperformer, gaining 0.1% today, despite continued rebound action in WTI crude oil futures ($77.84/bbl, +1.84, +2.4%).

Treasuries mostly settled with gains following today's $16 billion 20-yr bond auction, which was met with solid demand. The 2-yr yield settled unchanged at 4.90% and the 10-yr note yield fell two basis points to 4.42% after sitting at 4.47% just ahead of the auction results.

Separately, Kohl's (KSS 24.86, -0.70, -2.7%) and Best Buy (BBY 68.11, -0.11, -0.2%) trailed today's action in front of their quarterly results before Tuesday's open. 

Reviewing today's economic data:

• October Leading Indicators -0.8% (Briefing.com consensus -0.7%); Prior -0.7%

The S&P 500 closed the session near its high of the day with a modest 0.2% loss. The negative bias was partially driven by profit-taking activity after big gains since late October. There was not a lot of conviction from sellers, though, in this seasonally strong period for the market. Volume at the NYSE and Nasdaq was lower than average.

Including today's modest declines, the S&P 500 and Nasdaq Composite are still up 8.2% and 10.5%, respectively, so far this month. 

Relative weakness in some mega cap names weighed on index performance today. NVIDIA (NVDA 499.44, -4.65, -0.9%) was a standout in that regard ahead of its market-moving earnings report after today's close. Amazon.com (AMZN 143.90, -2.23, -1.5%) was another standout loser on reports of Jeff Bezos selling some stock.

Still, NVDA and AMZN both recovered from their worst levels as the broader market climbed off session lows, having been down as much as 2.4% and 3.2%, respectively. 

Market participants were digesting a mixed batch of earnings from retailers as well. Lowe's (LOW 198.06, -6.38, -3.1%), Best Buy (BBY 67.62, -0.49, -0.7%), and American Eagle Outfitters (AEO 16.63, -3.12, -15.8%) all traded down after reporting earnings while Dick's Sporting Goods (DKS 121.59, +2.58, +2.2%) and Burlington Stores (BURL 165.06, +28.35, +20.7%) closed higher after their earnings results.

Seven of the S&P 500 sectors registered a loss and four sectors saw modest gains. The health care sector (+0.6%) closed at the top of the leaderboard while the heavily-weighted information technology sector (-0.8%) saw the biggest decline. 

Separately, the FOMC Minutes for the Oct. 31 - Nov. 1 meeting indicated the committee's view that the Fed can proceed more carefully now, but may consider monetary policy tightening if incoming data indicated that progress stalled on bringing inflation in-line with the Fed's 2.0% target. In other words, they didn't say anything the market hadn't already heard. Accordingly, the reaction to the minutes was muted.

The 2-yr note yield settled three basis points lower at 4.87% and the 10-yr note yield settled unchanged at 4.42%, having digested the news that existing home sales in October proceeded at their slowest annual sales pace (3.79 million) since August 2010.

Reviewing today's economic data:

• October Existing Home Sales 3.79 mln (Briefing.com consensus 3.90 mln); Prior was revised to 3.95 mln from 3.96 mln
  • The key takeaway from the report is that sales of existing homes continue to be crimped by high mortgage rates, high selling prices, and limited inventory.

The stock market went into Thursday's Thanksgiving Day holiday giving investors more for which to be thankful. Fortified by yet another impressive earnings report from NVIDIA (NVDA 487.16, -12.28, -2.5%), which fell prone to a sell-the-news response, an encouraging initial jobless claims report, Israel and Hamas agreeing to a four day pause in fighting as part of a hostage release deal, and the lingering fear of missing out on further gains, the major indices padded their gains for the month.

The gains were modest but ultimately underpinned by broad-based buying interest and a general lack of selling interest at the index level. Advancers led decliners by a workmanlike 9-to-5 margin at the NYSE and by a 13-to-8 margin at the Nasdaq. The Invesco S&P 500 Equal-Weight ETF (RSP) gained 0.5%, as did the Vanguard Mega-Cap Growth ETF (MGK).

Deere (DE 370.74, -11.91, -3.1%), Guess? (GES 20.81, -2.91, -12.3%), Urban Outfitters (URBN 31.82, -4.49, -12.4%), Nordstrom (JWN 14.21, -0.69, -4.6%), and Autodesk (ADSK 202.66, -15.01, -6.9%) were some individual laggards of note following their earnings reports. Tesla (TSLA 234.21, -6.99, -2.9%), meanwhile, broke down below its 50-day moving average (237.99).

Otherwise, the market had a predominately positive disposition, holding its line in the afternoon trade following the news that Rainbow Bridge at Niagara Falls had been closed after a vehicle traveling to the U.S. from Canada had exploded. A follow-up report fromNBC Newssaid law enforcement officials were not calling this an act of terrorism.

Every sector finished the session higher with the exception of the energy sector (-0.1%). Gains for the other sectors ranged from 0.1% to 0.9%.

The energy sector trailed all day amid a roller-coaster session for oil prices, which traded as low as $73.90 per barrel before settling the session at $77.05 per barrel, down just 0.7%. A report that OPEC+ is delaying its weekend meeting until November 30 triggered the initial sell-off asBloombergsuggested the delay was due to Saudi Arabia's dissatisfaction with the oil production levels of other members.

The implication was that the other members have been overproducing. Prices likely rebounded on a sense that Saudi Arabia will aim to get that overproduction in check.

Today's trading volume was certainly held in check. It was light, which was no surprise ahead of the holiday. As a reminder, the stock market will be closed on Thursday and will end trading early at 1:00 p.m. ET on Friday.

Reviewing today's economic data:

• Initial jobless claims for the week ending November 18 decreased by 24,000 to 209,000 (Briefing.com consensus 227,000) while continuing jobless claims for the week ending November 11 decreased by 22,000 to 1.840 million.
  • The key takeaway from the report is that this report covers the period in which the survey for the November employment report is conducted, so the low level of initial jobless claims should support expectations for some decent growth -- certainly at this point in the Fed's tightening cycle -- for nonfarm payrolls.
• Durable goods orders for October declined 5.4% month-over-month (Briefing.com consensus -3.1%) following a downwardly revised 4.0% increase (from 4.7%) in September. Excluding transportation, durable goods orders were flat month-over-month (Briefing.com consensus 0.2%) following a downwardly revised 0.2% increase (from 0.5%) in September.
  • The key takeaway from the report rests in the recognition that nondefense capital goods orders, excluding aircraft -- a proxy for business spending -- dipped 0.1% month-over-month following a 0.2% decline in September. That isn't a major drop-off by any means, but it does fit with a softening environment in the manufacturing space.
• The final reading for the University of Michigan Consumer Sentiment Index for November came in at 61.3 (Briefing.com consensus 60.9), versus the preliminary reading of 60.4 and October's final reading of 63.8. In the same period a year ago, the index stood at 56.7. November marks the fourth straight month that consumer sentiment has declined.
  • The key takeaway from the report is the jump in inflation expectations, which is not what the Fed wants to see following 525 basis points worth of tightening already. It is the type of indication that will keep the Fed entertaining the thought that further tightening may still be necessary.
• The MBA Mortgage Applications Index was up 3.0% week-over-week with refinance applications up 2% and purchase applications up 3%

Markets were closed for Thanksgiving Day

If you wanted some excitement today, the stock market was not the place to be. It traded in a relatively listless fashion on very light volume, lacking the interest, the vigor, and the slate of news catalysts that are often seen during a normal trading session. 

This wasn't a normal session by virtue of the fact that the stock market closed at 1:00 p.m. ET, although if you were trading the SPDR S&P 500 ETF (SPY), you might have been questioning most of the session if the market had opened at all.

The market-cap weighted S&P 500 traded effectively in a seven-point range during today's session, harnessed by the relative weakness of the mega-cap stocks that offset the gains seen in other names. To wit: the S&P 500 Equal-Weight ETF (RSP) finished the day 0.3% higher while the Vanguard Mega-Cap Growth ETF (MGK) finished the day 0.3% lower. The market-cap weighted S&P 500 ended the session up fractionally.

NVIDIA (NVDA 477.76, -9.40, -1.9%) was in the spotlight throughout the abbreviated session, coming under some pressure afterReutersreported the company is delaying its China AI chip. Apple (AAPL 189.97, -1.34, -0.7%) also felt the sting of aReutersreport that suggested it saw a year-over-year decline in smartphone sales during China's Singles Day while competitors Huawei and Xiaomi enjoyed strong, double-digit growth.

Those losses contributed to the underperformance of the Nasdaq along with the losses seen in Alphabet (GOOG 138.22, -1.80, -1.3%), Meta Platforms (META 338.23, -3.26, -0.9%), and Microsoft (MSFT 377.43, -0.42, -0.1%).

Other stocks in the spotlight today included the retail stocks, not so much for their performance, but because today is Black Friday -- the official start to the holiday shopping season. The SDPR S&P Retail ETF (XRT) closed with a 0.6% gain.

S&P 500 sector performance was mostly positive. Nine sectors closed with gains ranging from 0.1% to 0.5%. The two losing sectors were communication services (-0.7%) and information technology (-0.3%).

Advancers outpaced decliners by a better than 2-to-1 margin at the NYSE and the Nasdaq.

Reviewing today's economic data:

• The preliminary November S&P Global US Manufacturing PMI checked in at 49.4 versus the final reading of 50.0 for October.
• The preliminary November S&P Global US Services PMI checked in at 50.8 versus the final reading of 50.6 for October.