What you need to know…
The S&P 500 Index ($SPX) (SPY) Friday closed up +0.06%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.33%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.12%.
Stocks on Friday settled mixed in a holiday-shortened session, with the Dow Jones Industrials climbing to a 3-1/2 month high. Friday’s U.S. economic news was mixed for stocks after S&P reported U.S. manufacturing activity in November contracted more than expected, but services activity in November expanded more than expected.
A jump in bond yields on Friday limited the upside in stocks. The 10-year T-note yield rose to a 1-week high Friday on negative carryover from an increase in the 10-year German bund yield to a 1-1/2 week high on reports that Germany will suspend a constitutional limit on net new borrowing for a fourth consecutive year, which may boost supply pressures.
On the positive side, U.S. stock index futures had carryover support from Friday’s rally in the Euro Stoxx 50 to a 3-1/2 month high after ECB President Lagarde said ECB policymakers are in a position to pause their tightening campaign.
The U.S. Nov S&P manufacturing PMI fell -0.6 to 49.4, weaker than expectations of 49.9. However, the Nov S&P services PMI unexpectedly rose +0.2 to a 4-month high of 50.8, stronger than expectations of a decline to 50.3.
Bank of America said EPFR Global data showed global stock funds saw inflows of about $49 billion in the two weeks through Nov 21, the most in 1-3/4 years.
According to Investment Company Institute data, about $29.1 billion flowed into U.S. money-market funds in the week through Nov 21. Total assets in money-market funds increased to a record $5.763 trillion from $5.734 trillion the week prior.
The markets are discounting a 5% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 13% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then discounting a 23% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 52% chance for that same -25 bp rate cut at the Apr 30-May 1, 2024, FOMC meeting.
U.S. and European government bond yields today are higher. The 10-year T-note yield rose to a 1-week high of 4.490% and finished up +6.3 bp at 4.467%. The 10-year German bund yield rose to a 1-1/2 week high of 2.663% and finished up +2.5 bp at 2.643%. The 10-year UK gilt yield rose to a 1-1/2 week high of 4.323% and finished up +2.6 bp at 4.283%.
ECB President Lagarde said, "We have already done a lot on rates," and the ECB is now at a point where it can pause and assess the impact of its policy tightening.
Japan Nov national CPI rose +3.3% y/y, weaker than expectations of +3.4% y/y. Nov national CPI ex-fresh food and energy eased to +4.0 % y/y from +4.2% y/y in Oct, weaker than expectations of +4.1% y/y and the slowest pace of increase in 7 months.
The Japan Nov Jibun Bank manufacturing PMI fell -0.6 to 48.1, the steepest pace of contraction in 9 months.
Overseas stock markets on Friday settled mixed. The Euro Stoxx 50 closed up +0.25%. China’s Shanghai Composite Index closed down -0.68%. Japan’s Nikkei Stock Index closed up +0.52%.
Today’s stock movers…
iRobot (IRBT) closed up more than +39% after Reuters reported that Amazon.com is set to win unconditional EU antitrust approval for its acquisition of the company.
Visa Outdoor (VSTO) closed up more than +3% after the company received an unsolicited proposal from Colt CZ.
Eli Lilly (LLY) closed up more than +1% after data compiled by Symphony Health Solutions showed U.S. retail sales of branded drugs used for psoriasis and psoriatic arthritis rose 4.4% in the week ended Nov 17, with Eli Lilly’s Taltz drug sales up +4.6%.
Crypto currency-related stocks rallied Friday, as the price of Bitcoin climbed more than +1% to a 5-1/2 month high. As a result, CleanSpark (CLSK) closed up more than +14%, and Coinbase Global (COIN) closed up more than +5%. Also, Marathon Digital (MARA) closed up more than +4%, and Riot Platforms (RIOT) are up more than +3%. In addition, MicroStrategy (MSTR) closed up more than +2%.
Nvidia (NVDA) closed down more than -1% to lead losers in the Nasdaq 100 after Reuters reported that the company told customers in China it is delaying the launch of a new artificial intelligence chip into Q1 of next year.
Apple (AAPL) closed down -0.7% to lead losers in the Dow Jones Industrials after Counterpoint Research data showed iPhone sales in China fell 4% y/y from Oct 30 to Nov 12.
Palantir (PLTR) closed down more than -2% on signs of insider selling after an SEC filing showed President and co-founder Cohen sold $7.11 million of shares on Monday and Tuesday.
LyondellBasell (LYB) closed down -0.87% on signs of insider selling after an SEC filing showed EVP and General Counsel Kaplan sold $1.54 million of shares on Monday.
Across the markets…
December 10-year T-notes (ZNZ23) Friday closed down -13.5 ticks, and the 10-year T-note yield rose +6.3 bp to 4.467%. Dec T-note prices Friday posted moderate losses and fell to a 1-week low, and the 10-year T-note yield rose to a 1-week high of 4.490% in a holiday-shortened session. T-notes retreated on negative carryover from a decline in 10-year German bunds to a 1-1/2 week low on reports that Germany will suspend a constitutional limit on net new borrowing for a fourth consecutive year, adding to concerns that more borrowing will boost deficits and supply pressures. T-notes recovered from their worst levels after Friday’s news showed that the U.S. Nov S&P manufacturing PMI fell more than expected, a dovish factor for Fed policy.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
