Market Update
S&P 500 and Nasdaq Extend November Gains, Crude Oil Drops After OPEC+ Postpones Meeting
Barry Adams
22 Nov, 2023
New York City
Market indexes extended weekly gains, and the yield on Treasury bonds edged higher.
The yield on 10-year Treasury notes rebounded from a two-month low and traded above 4.4%, still lower than the 2007 high of 5% reached in October.
In yesterday's trading, yields traded down for short- and long-term maturities after the Fed's latest meeting minutes did not provide any conclusive direction for rate cuts.
Policymakers supported a restrictive monetary stance because inflation is cooling but still far higher than the target rate of 2%.
On the earnings front, Nvidia reported a multi-fold increase in revenue and earnings after strong demand from cloud computing companies to process generative AI drove sales higher.
On the economic front, durable goods orders fell 5.4% in October from the previous month, when orders rose 4.0%.
Durable goods orders are seasonally adjusted but not adjusted for price changes, and from a year ago, orders rose 4.0%.
The decline in durable goods orders was the second largest since April 2020, after orders for transportation equipment fell 14.8% from 11.6% in September.
Moreover, non-defense capital goods orders excluding aircraft decreased 0.1% following a revised 0.2% fall in September, a closely watched barometer for capital spending by businesses.
Financial markets are closed on Thursday for the Thanksgiving holiday and will close early on Friday.
Weekly Mortgage Applications Rebound
Mortgage application volume increased 3% last week from the previous week, according to the seasonal index published by the Mortgage Bankers Association.
Demand finally began to rise at the fastest pace in two months after hitting a 28-year low in late October, and applications increased to their highest levels in six weeks but remained at very low levels.
Mortgage applications rose for the third week in a row in the week ending November 17.
Applications to purchase a home increased by 4% from the previous week, and refinance applications increased by 2%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $726,200 or less decreased to 7.41% from 7.61%, with points decreasing to 0.62 from 0.67 for loans worth 80% of the property.
The effective rate decreased from last week.
Despite the recent rebound in mortgage demand, applications are still down 20% from a year ago, when mortgage rates were 75 basis points lower.
U.S. Indexes and Yields
The S&P 500 index has rallied 8% in November, and the Nasdaq Composite has advanced 11% in the period after the market rally resumed from a pause on Tuesday.
The S&P 500 index edged up 0.4% to 4,557.83, and the Nasdaq Composite increased 0.7% to 14,293.43.
The yield on 2-year Treasury notes increased to 4.86%, 10-year Treasury notes inched higher to 4.36%, and 30-year Treasury bonds edged higher to 4.52%.
Crude oil decreased $1.32 to $76.44 a barrel, and natural gas prices fell 2 cents to $2.87 a thermal unit.
Gold decreased $6.98 to $1,991.43 an ounce after the U.S. dollar eased and worries of oil-driven inflation receded following the decline in oil prices.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.62.
U.S. Stock Movers
Nvidia Corp. declined 1.7% to $490.75 after the company reported a surge in quarterly earnings and sales.
Revenue in the third quarter increased 206% to $18.1 billion from $5.9 billion, net income soared 12-fold to $9.2 billion from $680 million, and diluted earnings per share rose to $3.71 from 27 cents a year ago.
The advanced chipmaker estimated revenue in the fourth quarter to be $20 billion, with a band of 2%, a gross margin of 74.5%, and a non-GAAP gross margin of 75.5%.
The company continues to benefit as businesses and the government transition from general-purpose computing to accelerated computing and generative AI.
HP Inc. decreased 2.3% to $27.21 after the personal computing and equipment company reported quarterly results.
Revenue in the fiscal fourth quarter decreased 5% to $13.8 from $14.8 billion; the company swung to a net income of $974 million from a loss of $23 million; and diluted earnings per share of 97 cents from a loss of 2 cents a year ago.
Fresenius Medical Care increased 0.4% to €27.71 after the dialysis service provider lifted its annual outlook.
Revenue in the third quarter declined 3% to €4.9 billion from €5.03 billion, net income fell to €84 million from €230 million, and net income dropped to 29 cents from 7 cents a year ago.
The company reiterated its 2023 revenue to grow at a low to mid-single-digit percentage rate from €19.4 billion in 2022.
The German company also said it had resolved its legal dispute with the U.S. Department of Defense and finalized its settlement for payment of dialysis services provided under the Tricare program to members of military service, their dependents, and retirees.
The company sought to receive payment for services provided under the Tricare program on or before January 11, 2023.
As a consequence of the settlement agreement, Fresenius anticipates a positive impact on operating income of €175 million in the fourth quarter.
Dick's Sporting Goods increased 2.2% to $121.59 after the specialty retailer reported quarterly results.
Comparable store sales rose 1.7% on top of a 6.5% increase in the quarter a year ago.
Revenue in the third quarter increased 2.8% to $3.04 billion from $2.95 billion, net income decreased 12% to $201 million from $228 million, and diluted earnings per share fell to $2.39 from $2.45 a year ago.
The company repurchased 3.5 million shares for $388 million in the third quarter.
The company lifted its 2023 comparable store sales outlook to a range of 0.5% to 2.0%, up from the previously estimated flat to 2.0% increase.
European Markets Mixed After Mid-year UK Budget Review
European markets advanced, and investors focused on the upcoming OPEC+ meeting this weekend.
Benchmark indexes in London, Paris, and Frankfurt headed higher after the U.S. Federal Reserve's early November meeting minutes showed policymakers are still looking for more signals for the sustained decline in inflation.
Moreover, most participants preferred to keep the monetary policy stance restrictive, despite the cooling of inflation, but economic growth is still stronger than expected and wages are still rising faster than needed to slow inflation down to 2%.
Brent crude oil price was steady ahead of the OPEC+ meeting this week, and traders are anticipating Saudi Arabia and Russia to extend voluntary production cuts again.
UK Mid-year Budget Offers Mixed Bag of Tax Breaks and Minimum Wage Increase
The UK's Chancellor of the Exchequer, Jeremy Hunt, delivered the 2023 Autumn Budget, offering a cut to national employee National Insurance to 10% from 12% to 27 million workers.
The government also announced changes to benefits programs, tax cuts for businesses, and a 9.8% rise in the minimum wage to £11.44 from April 2024.
Hunt also confirmed the 4.5 billion in funding for eight sectors of manufacturing to boost investment in the critical sector of the economy. Overall, the manufacturing industry employs about 2.6 million people and generates 43% of all UK exports.
The Office for Budget Responsibility, an independent arm of the government, sharply downgraded the economic growth estimate to 0.6% this year and 0.7% next year from the previous estimates of 1.8% and 2.5% released in March.
Europe Indexes and Yields
The DAX index increased 0.4% to 15,957.82, the CAC-40 index rose 0.4% to 7,260.73, and the FTSE 100 index fell 0.2% to 7,469.57.
The yield on 10-year German bonds increased to 2.58%; French bonds traded higher to 3.14%; the UK gilts increased to 4.14%; and Italian bonds inched higher to 4.33%.
The euro continued to rebound and approached the high last seen in late August after the U.S. rate hike worries receded.
The euro rebounded to $1.095, the British pound at $1.254, and the U.S. dollar at 88.42 Swiss cents.
Crude oil dropped as much as 4% after this weekend's OPEC+ meeting was postponed to November 30 after Saudi Arabia struggled to convince other oil producers to curb production.
Moreover, the U.S. oil inventories rose by 8.701 million barrels, more than twice the expected increase.
Brent crude decreased $1.84 to $80.60 a barrel, and the Dutch TTF natural gas edged higher by €1.05 to €45.11 per MWh.
Europe Stock Movers
Sage Group jumped 11.1% to 1,114.0 pence after the UK-based software firm launched a stock repurchase plan and reported strong revenue growth in its latest fiscal year.
Kingfisher plc declined 6.2% to 216.30 pence after the home improvement retailer lowered its profit outlook for the second time in three months.
Casino Guichard Perrachon SA decreased 0.3% to €0.81 after the grocery retailer estimated 2023 losses in its core French business.
ThyssenKrupp AG rose 6.7% to €7.07 after the German industrial engineering and steel company estimated profit in the fiscal year 2024.
The company reported a net loss of €2 billion in the fiscal year 2023.
Fresenius SE increased 0.4% to €27.71 after the dialysis service provider lifted its annual outlook.
The German company also said it had resolved its legal dispute with the U.S. government.
FOMC Minutes: Members Prefer Restrictive Monetary Stance
Brian Turner
21 Nov, 2023
New York City
Market indexes were little changed and lacked direction after the release of the minutes of the meeting ending on November 1.
Committee participants stressed that the current inflation "remained unacceptably high" and that further evidence would be required for them to be confident that the inflation was on a path to the 2% objective of the central bank.
A few participants noted that nominal wages are still rising at levels above the assessed levels, consistent with the sustained level of 2% inflation objective.
Investors looking for clues for the Federal Reserve to lower rates were disappointed, as most participants supported the continuation of restrictive policy and said that "the current stance of monetary policy was restrictive and was putting downward pressure on economic activity and inflation."
Most investors are anticipating the Federal Reserve holding rates for the third time in a row after the December meeting, providing a stable rate outlook all the way to the end of January 2024, when policymakers are scheduled to gather again.
U.S. Stocks Advance After 10-year Treasury Yields Drop to a 2-month Low
Barry Adams
22 Nov, 2023
New York City
Market indexes in early trading scaled higher, and investors looked to the bond market.
The yield on 10-year Treasury notes declined to a two-month low and traded around 4.4%, sharply lower than the 2007 high of 5% reached in October.
Yields traded down for short- and long-term maturities after the Fed's latest meeting minutes did not provide any conclusive direction for rate cuts.
Policymakers supported a restrictive monetary stance because inflation is cooling but still far higher than the target rate of 2%.
On the earnings front, Nvidia reported a multi-fold increase in revenue and earnings after strong demand from cloud computing companies to process generative AI drove sales higher.
Investors are also awaiting reports on durable goods orders and weekly jobless claims later in the day, and financial markets are closed on Thursday for the Thanksgiving holiday and will close early on Friday.
Weekly Mortgage Applications Rebound
Mortgage application volume increased 3% last week from the previous week, according to the seasonal index published by the Mortgage Bankers Association.
Demand finally began to rise at the fastest pace in two months after hitting a 28-year low in late October, and applications increased to their highest levels in six weeks but remained at very low levels.
Mortgage applications rose for the third week in a row in the week ending November 17.
Applications to purchase a home increased by 4% from the previous week, and refinance applications increased by 2%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $726,200 or less decreased to 7.41% from 7.61%, with points decreasing to 0.62 from 0.67 for loans worth 80% of the property.
The effective rate decreased from last week.
Despite the recent rebound in mortgage demand, applications are still down 20% from a year ago, when mortgage rates were 75 basis points lower.
U.S. Indexes and Yields
The S&P 500 index edged down 0.2% to 4,537.41, and the Nasdaq Composite decreased 0.7% to 14,184.93.
The yield on 2-year Treasury notes increased to 4.86%, 10-year Treasury notes inched higher to 4.36%, and 30-year Treasury bonds edged higher to 4.52%.
Crude oil decreased $2.09 to $75.65 a barrel, and natural gas prices fell 1 cent to $2.83 a thermal unit.
Gold increased $3.71 to $2,002.24 an ounce after the U.S. dollar eased.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.62.
U.S. Stock Movers
Nvidia Corp. declined 1.7% to $490.75 after the company reported a surge in quarterly earnings and sales.
Revenue in the third quarter increased 206% to $18.1 billion from $5.9 billion, net income soared 12-fold to $9.2 billion from $680 million, and diluted earnings per share rose to $3.71 from 27 cents a year ago.
The advanced chipmaker estimated revenue in the fourth quarter to be $20 billion, with a band of 2%, a gross margin of 74.5%, and a non-GAAP gross margin of 75.5%.
The company continues to benefit as businesses and the government transition from general-purpose computing to accelerated computing and generative AI.
HP Inc. decreased 2.3% to $27.21 after the personal computing and equipment company reported quarterly results.
Revenue in the fiscal fourth quarter decreased 5% to $13.8 from $14.8 billion; the company swung to a net income of $974 million from a loss of $23 million; and diluted earnings per share of 97 cents from a loss of 2 cents a year ago.
Fresenius Medical Care increased 0.4% to €27.71 after the dialysis service provider lifted its annual outlook.
Revenue in the third quarter declined 3% to €4.9 billion from €5.03 billion, net income fell to €84 million from €230 million, and net income dropped to 29 cents from 7 cents a year ago.
The company reiterated its 2023 revenue to grow at a low to mid-single-digit percentage rate from €19.4 billion in 2022.
The German company also said it had resolved its legal dispute with the U.S. Department of Defense and finalized its settlement for payment of dialysis services provided under the Tricare program to members of military service, their dependents, and retirees.
The company sought to receive payment for services provided under the Tricare program on or before January 11, 2023.
As a consequence of the settlement agreement, Fresenius anticipates a positive impact on operating income of €175 million in the fourth quarter.
Dick's Sporting Goods increased 2.2% to $121.59 after the specialty retailer reported quarterly results.
Comparable store sales rose 1.7% on top of a 6.5% increase in the quarter a year ago.
Revenue in the third quarter increased 2.8% to $3.04 billion from $2.95 billion, net income decreased 12% to $201 million from $228 million, and diluted earnings per share fell to $2.39 from $2.45 a year ago.
The company repurchased 3.5 million shares for $388 million in the third quarter.
The company lifted its 2023 comparable store sales outlook to a range of 0.5% to 2.0%, up from the previously estimated flat to 2.0% increase.
U.S. Movers: Burlington Stores, Dicks Sporting, Fresenius, HP, Nvidia
Scott Peters
22 Nov, 2023
New York City
Nvidia Corp. declined 1.7% to $490.75 after the company reported a surge in quarterly earnings and sales.
Revenue in the third quarter increased 206% to $18.1 billion from $5.9 billion, net income soared 12-fold to $9.2 billion from $680 million, and diluted earnings per share rose to $3.71 from 27 cents a year ago.
The advanced chipmaker estimated revenue in the fourth quarter to be $20 billion, with a band of 2%, a gross margin of 74.5%, and a non-GAAP gross margin of 75.5%.
The company continues to benefit as businesses and the government transition from general-purpose computing to accelerated computing and generative AI.
"“Large language model startups, consumer internet companies, and global cloud service providers were the first movers, and the next waves are starting to build.
Nations and regional CSPs are investing in AI clouds to serve local demand, enterprise software companies are adding AI copilots and assistants to their platforms, and enterprises are creating custom AI to automate the world’s largest industries," said founder and CEO of Jensen Huang in a statement to investors.
Burlington Stores soared 20% to $165.06 after the discount retailer reported strong quarterly results, and comparable store sales rose 6% from a year ago.
Revenue in the third quarter increased 12% to $2.28 billion from $2.04 billion, net income advanced to $48.55 million from $16.78 million, and diluted earnings per share rose to 75 cents from 26 cents a year ago.
Total merchandise inventories declined 8% to $1.32 billion from $1.45 billion, but store-level inventories rose 2%.
During the third quarter, the company repurchased 348,948 shares of its common stock for $52 million, and $78 million were still available in the stock repurchase plan.
For the fiscal fourth quarter, the retailer is estimating total sales to increase between 5% and 7% and comparable sales to fall in the range between a decline of 2% and zero.
The company estimated total sales in fiscal year 2024 to increase 11%, including a 2% increase because of the 53rd week, and adjusted earnings per share in the range of $5.52 and $5.67, including 20 cents of expected incremental expenses related to the recently acquired Bed Bath & Beyond leases.
Dick's Sporting Goods increased 2.2% to $121.59 after the specialty retailer reported quarterly results.
Comparable store sales rose 1.7% on top of a 6.5% increase in the quarter a year ago.
Revenue in the third quarter increased 2.8% to $3.04 billion from $2.95 billion, net income decreased 12% to $201 million from $228 million, and diluted earnings per share fell to $2.39 from $2.45 a year ago.
The company repurchased 3.5 million shares for $388 million in the third quarter.
The company lifted its 2023 comparable store sales outlook to a range of 0.5% to 2.0%, up from the previously estimated flat to 2.0% increase.
The retailer also lifted its 2023 diluted earnings per share outlook to $11.45 from $12.05 and raised its full-year non-GAAP outlook to $12.0 to $12.60, up from the previous estimate between $11.50 and $12.30.
Fresenius Medical Care increased 0.4% to €27.71 after the dialysis service provider lifted its annual outlook.
Revenue in the third quarter declined 3% to €4.9 billion from €5.03 billion, net income fell to €84 million from €230 million, and net income dropped to 29 cents from 7 cents a year ago.
The company reiterated its 2023 revenue to grow at a low to mid-single-digit percentage rate from €19.4 billion in 2022.
The company raised its 2023 operating earnings to grow at a low single-digit percentage rate from €1.54 billion in 2022, from the previous outlook of flat to a decline in the low single-digit percentage rate.
The German company also said it had resolved its legal dispute with the U.S. Department of Defense and finalized its settlement for payment of dialysis services provided under the Tricare program to members of military service, their dependents, and retirees.
The company sought to receive payment for services provided under the Tricare program on or before January 11, 2023.
As a consequence of the settlement agreement, Fresenius anticipates a positive impact on operating income of €175 million in the fourth quarter.
HP Inc. decreased 2.3% to $27.21 after the personal computing and equipment company reported quarterly results.
Revenue in the fiscal fourth quarter decreased 5% to $13.8 from $14.8 billion, the company swung to a net income of $974 million from a loss of $23 million, and diluted earnings per share of 97 cents from a loss of 2 cents a year ago.
Personal Systems net revenue fell 8% to $9.4 billion on the ongoing weakness in consumer and enterprise demand, and Printing net revenue fell 3% to $4.4 billion.
HP estimated fiscal first quarter 2024 diluted earnings per share between 60 cents and 70 cents and non-GAAP diluted earnings per share in the range between 76 cents and 86 cents.
The company estimated 2024 diluted earnings per share in the range between $2.68 and $3.08 and non-GAAP diluted earnings per share $3.25 and $3.65.
HP generated $1.9 billion of free cash flow in the fourth quarter, which included net cash provided by operating activities of $2 billion adjusted for net investments in leases of $28 million and net investments in property, plant and equipment of $134 million.
HP’s dividend payment of $0.2625 per share in the fourth quarter resulted in cash usage of $0.3 billion. HP returned 14% of its fourth quarter free cash flow to shareholders.
Europe Movers: Casino Guichard, Fresenius, Kingfisher, Sage Group, ThyssenKrupp
Inga Muller
22 Nov, 2023
Frankfurt
European markets advanced, the euro hovered near its three-month high, and the crude oil price was in focus ahead of the OPEC+ meeting later this weekend.
The DAX index increased 0.3% to 15,941.79, the CAC-40 index rose 0.3% to 7,246.18, and the FTSE 100 index fell 0.2% to 7,470.86.
The yield on 10-year German bonds increased to 2.58%; French bonds traded higher to 3.14%; the UK gilts increased to 4.14%; and Italian bonds inched higher to 4.33%.
Sage Group jumped 11.1% to 1,114.0 pence after the UK-based software firm launched a stock repurchase plan and reported strong revenue growth in its latest fiscal year.
Kingfisher plc declined 6.2% to 216.30 pence after the home improvement retailer lowered its profit outlook for the second time in three months.
Casino Guichard Perrachon SA decreased 0.3% to €0.81 after the grocery retailer estimated 2023 losses in its core French business.
ThyssenKrupp AG rose 6.7% to €7.07 after the German industrial engineering and steel company estimated profit in the fiscal year 2024.
The company reported a net loss of €2 billion in the fiscal year 2023 compared to €1.2 billion in income in the previous year, primarily due to impairment losses in its steel business in Europe.
Sales in the year declined to €37.5 billion from €41.1 billion, and adjusted operating earnings fell to €703 million from €2.06 billion a year ago.
The company proposed to pay a cash dividend of 15 euro cents, reflecting a free cash flow improvement to €363 million from an outflow of €476 million.
Fresenius Medical Care increased 0.4% to €27.71 after the dialysis service provider lifted its annual outlook.
Revenue in the third quarter declined 3% to €4.9 billion from €5.03 billion, net income fell to €84 million from €230 million, and net income dropped to 29 cents from 7 cents a year ago.
The company reiterated its 2023 revenue to grow at a low to mid-single-digit percentage rate from €19.4 billion in 2022.
The company raised its 2023 operating earnings to grow at a low single-digit percentage rate from €1.54 billion in 2022, from the previous outlook of flat to a decline in the low single-digit percentage rate.
The German company also said it had resolved its legal dispute with the U.S. Department of Defense and finalized its settlement for payment of dialysis services provided under the Tricare program to members of military service, their dependents, and retirees.
The company sought to receive payment for services provided under the Tricare program on or before January 11, 2023.
As a consequence of the settlement agreement, Fresenius anticipates a positive impact on operating income of €175 million in the fourth quarter.
European Markets Advanced Ahead of the UK Budget Review
Bridgette Randall
22 Nov, 2023
Frankfurt
European markets advanced, and investors focused on the upcoming OPEC+ meeting this weekend.
Benchmark indexes in London, Paris, and Frankfurt headed higher after the U.S. Federal Reserve's early November meeting minutes showed policymakers are still looking for more signals for the sustained decline in inflation.
Moreover, most participants preferred to keep the monetary policy stance restrictive, despite the cooling of inflation, but economic growth is still stronger than expected and wages are still rising faster than needed to slow inflation down to 2%.
Brent crude oil price was steady ahead of the OPEC+ meeting this week, and traders are anticipating Saudi Arabia and Russia to extend voluntary production cuts again.
The UK's Chancellor of the Exchequer, Jeremy Hunt, is scheduled to deliver the 2023 Autumn Budget later today, reviewing the economic progress and the government's budgetary plan for the rest of the year.
Hunt is expected to cut national insurance for about 28 million people and save the government about £5 billion a year.
Those earning about £50,000 a year could face a higher insurance cost of one percent, or about £380 a year.
Europe Indexes and Yields
The DAX index increased 0.3% to 15,941.79, the CAC-40 index rose 0.3% to 7,246.18, and the FTSE 100 index fell 0.2% to 7,470.86.
The yield on 10-year German bonds increased to 2.58%; French bonds traded higher to 3.14%; the UK gilts increased to 4.14%; and Italian bonds inched higher to 4.33%.
The euro continued to rebound and approached the high last seen in late August after the U.S. rate hike worries receded.
The euro rebounded to $1.095, the British pound at $1.254, and the U.S. dollar at 88.42 Swiss cents.
Brent crude decreased $0.42 to $82.01 a barrel, and the Dutch TTF natural gas edged higher by €1.28 to €45.34 per MWh.
Europe Stock Movers
Sage Group jumped 11.1% to 1,114.0 pence after the UK-based software firm launched a stock repurchase plan and reported strong revenue growth in its latest fiscal year.
Kingfisher plc declined 6.2% to 216.30 pence after the home improvement retailer lowered its profit outlook for the second time in three months.
Casino Guichard Perrachon SA decreased 0.3% to €0.81 after the grocery retailer estimated 2023 losses in its core French business.
ThyssenKrupp AG rose 6.7% to €7.07 after the German industrial engineering and steel company estimated profit in the fiscal year 2024.
The company reported a net loss of €2 billion in the fiscal year 2023.
Fresenius SE increased 0.4% to €27.71 after the dialysis service provider lifted its annual outlook.
The German company also said it had resolved its legal dispute with the U.S. government.
Fed Not Confident Enough About Downward Inflation Path, Needs More Evidence
Barry Adams
21 Nov, 2023
New York City
Stock futures edged lower, and investors focused on retailers after the latest batch of earnings and reviewed the November meeting minutes released by the Federal Reserve.
Market indexes were little changed and lacked direction after the release of the minutes of the meeting ending on November 1.
Committee participants stressed that the current inflation "remained unacceptably high" and that further evidence would be required for them to be confident that the inflation was on a path to the 2% objective of the central bank.
A few participants noted that nominal wages are still rising at levels above the assessed levels, consistent with the sustained level of 2% inflation objective.
Investors looking for clues for the Federal Reserve to lower rates were disappointed, as most participants supported the continuation of restrictive policy and said that "the current stance of monetary policy was restrictive and was putting downward pressure on economic activity and inflation."
Most investors are anticipating the Federal Reserve holding rates for the third time in a row after the December meeting, providing a stable rate outlook all the way to the end of January 2024, when policymakers are scheduled to gather again.
The S&P 500 index and the Nasdaq advanced for five days in a row after two popular benchmark indexes advanced in Monday's trading.
Investors reacted to earnings from Zoom Video, Lowe's Companies, Best Buy, Abercrombie & Fitch, Dick's Sporting Goods, Kohl's, and Burlington Stores.
Later in the day, investors are awaiting results from Nvidia, Dell, and HP.
U.S. Existing Home Sales Dropped to a Thirteen-Year Low
U.S. existing home sales in October declined 4.1% from the previous month to a seasonally adjusted annualized rate of 3.79 million units, the National Association of Realtors reported Tuesday.
The sales dropped to the lowest level since August 2010 and dropped 14.6% from 44 million a year ago.
The lack of homes available for sale and record high mortgage rates in nearly two decades continue to weigh on the market.
Total housing inventory at the end of October was 1.15 million units, up 1.8% from September but down 5.7% from 1.22 million a year ago.
The median existing-home price for all housing types in October was $391,800, an increase of 3.4% from $378,800 a year ago, and all four regions registered price increases.
Single-family home sales declined to a seasonally adjusted annual rate of 3.38 million in October, down 4.2% from 3.53 million in September and 14.6% from the previous year.
The median existing single-family home price was $396,100 in October, up 3.0% from October 2022.
U.S. Indexes and Yields
The S&P 500 index edged down 0.2% to 4,537.41, and the Nasdaq Composite decreased 0.7% to 14,184.93.
The yield on 2-year Treasury notes increased to 4.91%, 10-year Treasury notes inched higher to 4.42%, and 30-year Treasury bonds edged higher to 4.56%.
Crude oil decreased $0.29 to $77.53 a barrel, and natural gas prices fell 2 cent to $2.86 a thermal unit.
Gold increased $23.54 to $2,000.54 an ounce after the U.S. dollar eased on the expectations that the Federal Reserve will continue hold rates at its next meeting in December and may begin to lay ground work to lower rates in early 2024.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.34.
U.S. Stock Movers
Lowe's Companies dropped 5.3% to $193.59 after the home improvement retailer lowered its full-year sales and earnings outlook.
Net sales in the third quarter declined to $20.5 billion from $23.5 billion, net income soared to $1.8 billion from $154 million, and diluted earnings per share rose to $3.06 from 25 cents a year ago.
Earnings in the prior year included an impairment charge of $2.1 billion after the company sold its Canadian retail business.
During the quarter, the company repurchased approximately 7.3 million shares for $1.6 billion and paid $642 million in dividends.
Comparable sales in the quarter declined 7.4% after the pandemic-fueled demand for home improvement projects moderated.
The company lowered its full-year 52-week sales estimate to $86 billion from the previous estimate range of $87 billion to $89 billion.
Comparable sales are expected to decline 5% from the previously estimated range of 2% to 4%.
The company also lowered its adjusted diluted earnings per share estimate to $13.0 from the previous estimate between $13.20 and $13.60.
European Markets Hovered Near Flatline
European markets struggled to advance, and the euro hovered near the three-month high.
Benchmark indexes in Frankfurt, Paris, and London traded sideways ahead of comments from several European Central Bank officials and the release of minutes of the November meeting by the U.S. Federal Reserve.
Positive market sentiment over the last two weeks drove market indexes higher after interest rate hike worries receded, and the stable interest rate outlook also supported market enthusiasm.
Investors also welcomed the increase in vehicle sales in October, suggesting resilient consumer spending.
EU Passenger Vehicle Sales Expanded Fifteenth Consecutive Month
Vehicle sales in the European Union continued to expand as buyers returned to purchase electric vehicles and producers faced a few supply chain issues, the European Automobile Manufacturers Association reported today.
New vehicle sales rose for the fifteenth month in a row.
Passenger vehicle sales in October jumped 14.6% from a year ago to 855,484 units, and the market share of fully electric vehicles increased to 14.2% from 12% in the previous month.
Battery-powered electric vehicle sales for the ten months to October jumped to 14%, surpassing diesel vehicles for the first time.
Three of the four largest vehicle markets in the European Union posted double-digit gains.
Vehicle registration in France rose 21.9%, Italy gained 20%, and Spain advanced 18.1%.
UK Public Sector Borrowing Expands
The UK's public sector net borrowing, excluding banks, increased to £14.9 billion, compared to £10.5 billion a year ago, the Office for National Statistics reported Tuesday.
The net borrowing in October was the second largest in the month since record-keeping began in 1993.
The UK government's total spending increased 7.7% to £99.8 because higher family benefits offset the ending of energy subsidies.
In addition, the government's revenue increased by 3.3% to £85.2 billion, driven by a £2.7 billion increase in central government tax revenue.
Despite the increase in net borrowings in the last three months in a row, borrowing between April and October totaled £98.3 billion, £17 billion less than estimated by the Office for Budget Responsibility.
Europe Indexes and Yields
The DAX index increased 0.1% to 15,900.53, the CAC-40 index fell 0.3% to 7,229.45, and the FTSE 100 index fell 0.2% to 7,481.99.
The yield on 10-year German bonds increased to 2.592%; French bonds traded lower to 3.152%; the UK gilts increased to 4.11%; and Italian bonds inched lower to 4.32%.
The euro continued to rebound and approached the high last seen in late August after the U.S. rate hike worries receded.
The euro rebounded to $1.094, the British pound at $1.253, and the U.S. dollar at 88.38 Swiss cents.
Brent crude decreased $0.42 to $81.89 a barrel, and the Dutch TTF natural gas edged lower by €2.02 to €43.41 per MWh.
Europe Stock Movers
Sonova Holding AG increased 7.5% to CHF 251.40 despite the Swiss hearing aid maker lowering its annual core profit forecast.
CRH PLC increased 1.8% to 4,827.0 pence after the building materials solution provider agreed to acquire a cement plant and 20 ready concrete mix plants in Texas from Martin Marietta Materials, Inc. for $2.1 billion.
International Consolidated Airlines Group decreased 2.4% to 159.85 pence, despite the parent company of British Air reaffirming its annual outlook.
Cranswick plc increased 1.5% to 3,700.0 pence after the meat producer estimated its annual profit near the upper end of the estimated range by analysts.
Rheinmetall AG jumped 4% to €292.80 after the German defense contractor released its mid-term strategy.
Banca Monte dei Paschi di Siena SpA dropped 8.5% to €2.81 after the Italian government sold its 25% stake in the bailed-out bank.
U.S. Existing Home Sales Dropped to a Thirteen-Year Low
Brian Turner
21 Nov, 2023
New York City
U.S. existing home sales in October declined 4.1% from the previous month to a seasonally adjusted annualized rate of 3.79 million units, the National Association of Realtors reported Tuesday.
The sales dropped to the lowest level since August 2010 and dropped 14.6% from 44 million a year ago.
The lack of homes available for sale and record high mortgage rates in nearly two decades continue to weigh on the market.
Total housing inventory at the end of October was 1.15 million units, up 1.8% from September but down 5.7% from 1.22 million a year ago.
The median existing-home price for all housing types in October was $391,800, an increase of 3.4% from $378,800 a year ago, and all four regions registered price increases.
Single-family home sales declined to a seasonally adjusted annual rate of 3.38 million in October, down 4.2% from 3.53 million in September and 14.6% from the previous year.
The median existing single-family home price was $396,100 in October, up 3.0% from October 2022.