S&P and Nasdaq Jump 3% After Powell Suggests Smaller Rate Hikes

Barry Adams
30 Nov, 2022
New York City

Market indexes jumped following morning doldrums after comments from the Fed Chairman indicated rate hikes may be moderated at the next policy meeting in December. 

"Monetary policy affects the economy and inflation with uncertain lags, and the full effects of our rapid tightening so far are yet to be felt. 

Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. 

The time for moderating the pace of rate increases may come as soon as the December meeting," said Chairman Jay Powell in a speech Wednesday. 

However, Powell cautioned that rates may have to go higher for a longer period than previously anticipated and stay higher to keep the rates sufficiently restrictive and bring down inflation to the target rate of 2%. 

 

Q3 GDP Growth Revised Higher  

U.S. economic growth in the third quarter was revised higher to 2.9% from the previous estimate of 2.6%, the U.S. Bureau of Economic Analysis reported Wednesday.  

The international trade contribution was revised higher to 2.93 percentage points from 2.77 percentage points in the advance estimate after exports rose and imports shrank more than estimated. 

Consumer spending growth was revised higher to 1.7% from the previous estimate of 1.4%. 

 

Job Openings Fall In October 

The number of job openings fell by 353,000 to 10.3 million in October, JOLT report from the U.S. Bureau of Labor Statistics showed Wednesday. 

The number of hires were nearly unchanged at 6.0 million and separations were stable at 5.7 million. 

Of the total separations in October, 4.0 million employees quit and layoffs and discharges were 1.7 million.  

 

Mortgage Applications Ease 

Mortgage application volume declined 0.8% in the week ending on November 25 from the previous, the Mortgage Bankers Association reported Wednesday. 

The seasonally adjusted data included the observance of Thanksgiving holiday and application volume plunged 33% on an unadjusted basis. 

The Refinance Index decreased 13% from the previous week and was 86% lower than the same week a year ago.

Mortgage rates declined to 6.49% from 6.67% in the previous week for 30-year fixed loans with 20% down payment. 

 

Markets Lack Direction Amid Mixed Signals 

Stocks lacked direction after economic growth was revised higher, job openings fell and mortgage applications declined. 

The S&P 500 index increased 1.7% to 4,025.34 and the Nasdaq Composite index increased 2.8% to 11,297.19. 

Crude oil prices rose $2.0 to $81.19 a barrel and natural gas prices eased 34 cents to $6.88 a thermal unit. 

The yield on 2-year U.S. Treasury notes rose to 4.49%, 10-year Treasury notes increased to 3.69% and 30-year U.S. Treasury bonds advanced to 3.81%. 

 

Stock Movers 

Petco Health & Wellness Company Inc soared 13.9% to $10.81 after the retailer of pet food and products reported better-than-expected quarterly results. 

Same store sales in its latest quarter increased 4.1% and net revenue in the fiscal third quarter ending in October rose 4.0% to $1.5 billion. 

Net income declined 62% to $19.9 million from $52.7 million and diluted earnings per share fell to 7 cents from 20 cents a year ago. 

DoorDash Inc increased 7.7% to $57.43 after the company CEO Tony XU said it plans to layoff 1,250 corporate staff amid economic slowdown and the need to cut costs. 

The company employed about 8,600 at the end of 2021 and about 50% of its staff has been with the company less than two years, according to the filings with the SEC. 

Crowdstrike Holdings Inc plunged 16.6% to $115.16 after the cybersecurity company reported higher-than-expected sales and earnings in its latest quarter. 

However, the company guided weaker-than-expected revenue growth.