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The S&P 500 Futures Are Near Two-month Highs Following a Strong Rally

November 16, 2023
minute read

U.S. stocks experienced a slight decline on Thursday, signaling a slowdown in the November rally that had propelled major indexes to their highest points in two months.

Here's how the stocks are performing:

  • The S&P 500 dropped 7 points, or 0.2%, to 4,496.
  • The Dow Jones Industrial Average fell 90 points, or 0.3%, to 34,902.
  • The Nasdaq Composite declined by 45 points, or 0.3%, to 14,058.

The previous day witnessed the Dow Jones Industrial Average rising by 164 points (0.47%) to 34,991, the S&P 500 gaining 7 points (0.16%) to 4,503, and the Nasdaq Composite increasing by 9 points (0.07%) to 14,104.

Market Dynamics:U.S. stocks took a pause on Thursday after a rally that had lifted the Nasdaq by almost 10% since the start of November, enabling both the tech-heavy index and the S&P 500 to move out of correction territory.

Throughout the month, a widespread rally boosted neglected segments of the market, such as the small-cap Russell 2000 index, driven by optimism that the Federal Reserve might cut interest rates as early as March.

JJ Kinahan, CEO of IG North America, noted that the market was overdue for a downturn after the S&P 500 had risen in 11 of the past 13 sessions until Wednesday. He mentioned that the pause was a result of a break from the intense buying activity witnessed over the previous week.

Mark Newton, Head of Technical Strategy at Fundstrat, acknowledged the positive development of a broader range of shares participating in the rally this month, not solely led by major tech stocks. However, he cautioned that stocks appear overbought based on certain indicators, suggesting a less favorable risk/reward scenario for U.S. equities following any further rally into the next week.

Factors Impacting Markets:Recent indications of cooling inflation, increased layoffs, and a slowdown in job creation have solidified expectations that the Fed's last interest-rate hike occurred in July. This shift in monetary policy, coupled with falling Treasury yields, has contributed to the stock market's gains in November after three consecutive months of declines.

The 10-year Treasury yield was trading at 4.45%, down 9.9 basis points on Thursday, continuing its decline from the 16-year high reached the previous month.

Weekly jobless-claims data revealed an increase to a three-month high, signaling a cooling labor market. Despite two positive inflation reports earlier in the week, concerns about the fragility of the market surfaced with Cisco Systems' disappointing results causing a significant drop in its stock after hours on Wednesday.

Earnings reports from companies like Walmart, Macy's, and Williams-Sonoma provided mixed signals about the state of the U.S. consumer. Walmart's CEO warned about a potential period of deflation in the coming months. Additionally, economic reports from the Philadelphia Fed and industrial production indicated modest improvements and unexpected declines, respectively.

Bryan Curtis
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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