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U.S. stocks moved higher Wednesday, while Treasury yields and the dollar tested multi-month lows, as investors begin to accelerate bets on a Federal Reserve rate cut into early next year.
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Updated at 2:27 PM EST
Is Beige the new black?
The Fed's 'Beige Book' report of economic activity around the central bank's twelve different regions showed moderating growth, a pullback in consumer spending and a evidence of a weakening job market over the month of November.
The collection of regional summaries, however, wasn't compelling enough to either bury near-term recession forecasts nor indicate that the economy is heading into the final month of the year on the best of footing.
Stocks were largely unmoved as a result, with the S&P 500 up 10 points, or 0.2%, on the session while benchmark 10-year note yields eased modestly to 4.269%.
Updated at 12:48 PM EST
Premium healthcare deal
Cigna (CI) -) shares were on the move in early afternoon trading, falling nearly 5%, after the Wall Street Journal reported that the healthcare insurance giant is in talks about a potential merger with its smaller rival Humana (HUM) -).
Related: Cigna tumbles on Humana merger talk reports; FTC already probing PBMs
Updated at 12:09 PM EST
Biggie Small Caps
The Russel 2000, the broader measure of smaller U.S. companies, is leading market gains in the mid-day session amid the pullback in Treasury bond yields and accelerated rate cut bets.
The Russell was last marked 1% higher on the day, extending its November rally to just under 10%, even as Wall Street's larger indices pare gains heading into the afternoon hours.
The S&P 500 was last seen trading 6 points higher, or 0.15%, while the Dow was up 42 points and the Nasdaq 10 points.
Updated at 10:53 AM EST
Oil's not well
Oil prices resumed their long autumn decline in early trading ahead of OPEC's delayed meeting in Vienna tomorrow, with the cartel is reportedly struggling to reach an agreement on output cuts into 2024.
The U.S. Energy Department, meanwhile, said domestic crude stocks rose by 1.6 million barrels last week, against a forecast for a 900,000 barrel decline, suggesting global demand remains weak heading into the final month of the year.
Brent crude futures contracts for January delivery, the global pricing benchmark, were last seen 21 cents lower at $81.49 per barrel while WTI futures for the same month fell 6 cents to $76.35 per barrel.
Updated at 10:09 AM EST
All this growth makes me nervous
Richmond Fed President Thomas Barkin told CNBC's CFO Council summit that the U.S. economy remains "remarkably resilient" following Q3 GDP data showing a 5.2% growth rate and consumer spending data indicating a robust Thanksgiving shopping tally.
He added, however, that the underlying strength means he's "skeptical" that inflation i on a "clear path" to return to the central bank's 2% target.
Updated at 9:40 AM EST
Higher for longer, but for stocks!
Wall Street is looking to add to one of the best monthly rallies on record Wednesday, with stocks opening higher on the back of subdued Treasury yields and a softer U.S. dollar.
The S&P 500 was marked 28 points higher, or 0.6%, while the Dow gained 35 points and the Nasdaq added 127 points, or 0.9%, in the opening minutes of trading.
Updated at 8:37 AM EST
Worst. Recession. Ever.
The U.S. economy grew at a 5.2% pace over the three months ending in October, the Commerce Department said in its second look at third quarter GDP, up from its initial estimate of 4.9% and the best pace of growth since late 2021.
Third quarter inflation, meanwhile, was revised lower, with the PCE index estimated to have risen 3.4%, down from a prior estimate of 3.6%, suggesting the economy is carrying a more productive momentum into the final three months of the year.
Even hotter: real GDP expanded by +5.2% (q/q ann.) in 3Q23, up from initial estimate of +4.9% … personal consumption revised lower while business investment revised higher pic.twitter.com/Bn6tfoOjt5
— Liz Ann Sonders (@LizAnnSonders) November 29, 2023
Updated at 8:26 AM EST
Bonds Away!
Treasury yields continue to move lower in early trading, with 2-year notes last pegged at 4.674%, down 6 basis points from last night's closing levels and more than 37 basis points south of their end-October close.
Benchmark 10-year notes, meanwhile, were holding below the 4.3% mark, at 4.297%, extending their November decline to around 28 basis points.
Updated at 7:01 AM EST
GM pays strikes, now shareholders
General Motors (GM) -) shares are surging in pre-market trading after the carmaker reinstated its 2023 profit guidance following the six-week UAW strike, adding it would boost its quarterly dividend and buyback around $10 billion in stock.
GM shares were last marked 7.6% higher and expected to open at $31.30 each.
Related: General Motors surges on dividend boost, $10 billion buyback, new profit outlook
Fed Governor Christopher Waller, speaking at the American Enterprise institute yesterday in Washington, indicated that the Fed could both deliver a 'soft landing' for the world's biggest economy and begin cutting rates as early as the first quarter of next year if inflation continues to moderate at its current pace "for three months, four months, five months."
"It has nothing to do with trying to save the economy. It is consistent with every policy rule. There is no reason to say we will keep it really high," Waller said.
The change in tone from Waller, previously considered one of the more hawkish members of the Fed's rate-setting committee, triggered a sharp rally in Treasury bonds that pulled benchmark 10-year note yields below 4.3% for the first since since mid-September.
The CME Group's FedWatch is also pricing in a 40.6% chance the Fed will lower its benchmark lending rate by 25 basis points in March, with the odds of a cut in May pegged at 50.1%. A June cut is fully price-in, according to FedWatch data.
Bill Ackman, the billionaire investor who runs Pershing Square Capital, told Bloomberg he expects the Fed to move in the first quarter.
“I think there’s a real risk of a hard landing if the Fed doesn’t start cutting rates pretty soon,” he said.
The Commerce Department will publish its latest estimate on third quarter GDP growth at 8:30 am eastern time, with analysts looking for a modest boost to the current 4.9% assessment.
The Atlanta Fed's GDPNow forecasting tool, meanwhile, pegs current quarter growth at 2.1%, up modestly from the 2% advance it calculated earlier this month.
The Fed will also publish its 'Beige Book' of economic activity around the region over the month of November at 2:00 pm eastern time.
The Fed's preferred inflation gauge, the core PCE price index, will be published at 8:30 am eastern time Thursday, followed by a Friday speech from Fed Chair Jerome Powell at at Spelman College in Atlanta.
In overseas markets, Europe's Stoxx 600 was marked 0.48% higher in early Frankfurt trading, while the FTSE 100 slipped 0.1% as the pound climbed to 1.2681 against the weakened greenback.
Overnight in Asia, the region-wide MCSI ex-Japan index slipped 0.26% into the close of trading, while the Nikkei 225 fell 0.26% in Tokyo.
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