The S&P 500 Index ($SPX) (SPY) on Wednesday closed up by +0.69%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up by +0.67%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up by +0.87%. December E-mini S&P futures (ESZ25) rose +0.70%, and December E-mini Nasdaq futures (NQZ25) rose +0.89%.
Stock indexes rallied on Wednesday, with the S&P 500 posting a 2-week high and the Dow Jones Industrials and Nasdaq 100 posting 1.5-week highs. Strength in semiconductor stocks on Wednesday led the technology sector higher and lifted the overall market.
Join 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily.
Optimism about a Fed rate cut also boosted stocks heading into Thursday’s Thanksgiving Day holiday. Market sentiment has improved this week, as bond yields have fallen amid weak US economic news and dovish Fed comments, strengthening the case for a rate cut at next month’s FOMC meeting. The chance of a Fed rate cut at the December 9-10 FOMC meeting has risen to 80% from 30% last week.
Stocks also received support from today’s US economic news, which bolstered optimism about the economic outlook after weekly jobless claims unexpectedly fell to a 7-month low and Sep capital goods new orders, a proxy for capital spending, rose more than expected.
US MBA mortgage applications rose +0.2% in the week ended November 21, with the purchase mortgage sub-index up +7.6% and the refinancing mortgage sub-index down -5.7%. The average 30-year fixed rate mortgage rose +3 bp to 6.40% from 6.37% in the prior week.
US weekly initial unemployment claims unexpectedly fell -6,000 to a 7-month low of 216,000, showing a stronger labor market than expectations of an increase to 225,000.
US Sep capital goods new orders nondefense ex-aircraft and parts, a proxy for capital spending, rose +0.9% m/m, stronger than expectations of +0.3% m/m.
The US Nov MNI Chicago PMI fell -7.5 to 36.3, weaker than expectations of 43.6 and the steepest pace of contraction in 17 months.
The Fed Beige Book was mixed as it stated, “Outlooks were largely unchanged overall, with some contacts noting an increased risk of slower activity in coming months, while some optimism was noted among manufacturers.”
The Bureau of Labor Statistics (BLS) canceled its October consumer price report last Friday and said the November report will be released on December 18. Last Wednesday, the BLS said it would not publish an October employment report and noted that it would incorporate those payroll figures into the November report, scheduled for publication on December 16.
The markets are discounting an 80% chance of another -25 bp rate cut at the next FOMC meeting on December 9-10.
Q3 corporate earnings season is drawing to a close as 475 of the 500 S&P companies have released results. According to Bloomberg Intelligence, 83% of reporting S&P 500 companies exceeded forecasts, on course for the best quarter since 2021.