The stock futures were in the red this morning, following a positive day in the broader market on Tuesday and ahead of a significant release of data this morning. At 8:30 AM today, the first revision of U.S. third-quarter GDP showed an increase of 2.8%, which was in line with the prior estimate, while initial jobless claims were 215,000, which was near economists’ estimates. Overall, traders viewed this information positively and bid up stocks a bit, causing the futures markets to trade closer to breakeven levels. This suggests an uneven start to the trading day. Later today, the Bureau of Economic Analysis will release its core- and non-core Personal Consumption Expenditures (PCE) Price Index for October, which should give some insight into inflationary pressures, and this could impact trading.
The markets started positively yesterday, benefiting from a higher consumer sentiment index, while inflationary pressures slowed for housing, according to the S&P Case-Shiller home price index. These factors bolstered sentiment, and investors bought stocks in the early portion of the trading day. This trend continued through the trading session, and the major market indices ended near their daily highs. The S&P 500 and Dow Jones Industrial Average closed at all-time highs, while the NASDAQ was within 1% of its historic top. Overall, the S&P 500 rose 34 points (up 0.57%), the NASDAQ increased 119 points (up 0.46%), and the Dow Jones Industrial Average was higher by 124 points (up 0.28%). Market breadth, on the other hand, was quite negative, with decliners outpacing advancers by a 1.8-to-1.0 ratio. Utilities stocks were amongst the best performers, while materials stocks were amongst the weakest.
In commodity news, oil prices fell early yesterday before recovering some, as news broke that the U.S. had reached record highs in drilling. Around 13.4 million barrels per day were drilled, and expectations are for slightly higher levels of drilling in the coming year. However, the recovery benefited from a report showing that inventories had declined. As for the rich brown fuel, coffee futures continue to be at their highest level in decades. Elsewhere, U.S. Treasury bond yields were largely lower, especially those with shorter durations, as traders bought more bonds. The Chicago Board Options Exchange Volatility Index, or VIX, commonly known as the fear index, declined yesterday as traders demanded less options protection.
The markets will be closed tomorrow for the Thanksgiving national holiday, while they will trade on a shortened schedule on Friday, closing at 1:00 PM. The U.S. bond market will also be closed on Thanksgiving and run a shorter trading day on Black Friday. Very few economic reports will be released in the days ahead, though traders will be looking to see what early insight they can glean into the Christmas shopping season from early Black Friday results. Elsewhere, a couple of mostly foreign companies report quarterly results in the days ahead. Value Line wishes all a safe and peaceful Thanksgiving holiday. - John E. Seibert III
At the time of this article’s writing, the author held positions in none of the companies mentioned.
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