Tech Stocks Power Nasdaq 8-day Rally, Treasury Yields Declined Again

Barry Adams
07 Nov, 2023
New York City

The decline in Treasury yields supported a market advance for the seventh day in a row as investors snapped up tech stocks.

Market indexes traded higher after the S&P 500 index advanced for the seventh day in a row and the Nasdaq Composite advanced for the eighth session.

Microsoft jumped 1.6% to a record high of $362.45, Apple increased 1.7% to $182.34 and Google-parent Alphabet advanced 1% to $131.62.  

Investors bid up stocks after the Federal Reserve paused rate hikes for the second time in a row on November 1 after citing progress on inflation.

In addition, after the Fed's rate decision, a softer increase of 115,000 in nonfarm payroll in October also supported the Fed's case of holding interest rates.

Market indexes soared more than 5% last week on the hopes that the Federal Reserve may hold rates for the third time in a row at the next meeting on December 12–13.

In the absence of any market-moving economic releases, investors are likely to focus on comments from Fed Chairman Jerome Powell and react to earnings announcements.

Chairman Powell is scheduled to deliver the Fed's assessment of the economy at two separate industry gatherings this week.

So far this month, the S&P 500 index has advanced 4.5% and the Nasdaq Composite has jumped 6.2%.

Investors are awaiting quarterly results from ebay, Rivian, and Lucid after the close of regular  trading hours. 

 

U.S. International Trade Deficit Widened In October 

The trade deficit in the U.S. widened to $61.5 billion in September, following an upwardly revised $58.7 billion gap in August, the Bureau of Economic Analysis reported Tuesday.

Imports increased 2.7% from a year ago to $322.7 billion, and exports rose at a slower 2.2% pace to $261.1 billion.

Exports rose to the highest level since August 2022, driven by crude oil, soybeans, corn, travel, and transport services.

Imports advanced on the rising demand for cell phones, civilian aircraft parts and machinery, passenger cars, and computer accessories.

 

U.S. indexes and Yields

The S&P 500 index increased 0.4% to 4,382.96, and the Nasdaq Composite increased 1.1% to 13,664.09.

The yield on 2-year Treasury notes increased to 4.89%, 10-year Treasury notes inched higher to 4.54%, and 30-year Treasury bonds edged down to 4.71%.

Crude oil decreased $3.11 to $77.69 a barrel, and natural gas prices fell 12 cents to $3.13 a thermal unit.

Gold decreased $8.16 to $1,969.42 an ounce after bond yields edged lower and the dollar weakened.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 105.75.

 

U.S. Stock Movers

Uber Technologies Inc. increased 1.7% to $48.96 despite the double-digit ride hailing company's weaker-than-expected quarterly results.

Revenue in the third quarter increased 11% to $9.3 billion from $8.3 billion, but the company swung to a loss of $1.3 billion from a profit of $221 million, and diluted earnings per share were  ($0.61) compared to 10 cents a year ago.

Gross bookings in the quarter increased by 21% to $35.3 billion, driven by a 31% increase in mobility bookings to $17.9 billion and an 18% increase in delivery bookings to $16.1 billion.

Monthly active customers on the platform increased by 15% to 142 million from 124 million.

The company anticipates gross bookings in the fourth quarter in the range of $36.5 billion and $37.5 billion.

WeWork Inc. closed at 84 cents in Monday's trading but dropped as low as 11 cents in Tuesday's pre-market trading after the company filed for Chapter 11 bankruptcy protection in New Jersey federal court.

The company said its liabilities are between $10 billion and $50 billion and said it has entered into agreements with most of its secured note holders.

WeWork was valued at $47 billion in 2019 fund raising led by SoftBank but was forced to accept a sharply lower valuation of about $8 billion when it agreed to go public through a special purpose acquisition company in 2021.

TripAdvisor Inc. soared 10% to $17.76 after the online travel platform company reported better-than-expected quarterly results.

Revenue in the third quarter increased 16% to $533 million from $459 million, net income increased 8% to $27 million from $25 million, and diluted earnings per share rose to 19 cents from 17 cents a year ago.

On September 7, the company's board authorized a $250 million stock repurchase plan over the next two years.

 

European Indexes Drifted Lower and Bond Yields Eased 

Stock market indexes in Europe traded down after China reported mixed international trade data.

Market indexes in Frankfurt, Paris, and London edged lower after China's exports declined for the sixth month in a row, but imports unexpectedly increased.

German industrial production declined for the fourth month in a row, and industrial producer prices in the eurozone declined at a record pace in September.

 

China Exports and Trade Surplus Dropped

Exports declined in October by 6.4% to $274.3 billion, and imports rose 3.0% to $218.3 billion, the General Administration of Customs reported Tuesday.

Imports rose for the first time since February, suggesting that the Chinese government's plan to stimulate the economy is having a positive impact.

Sluggish exports dragged the trade surplus in October to $56.5 billion from $77.7 billion in September.

Exports declined to the U.S. by 8.2%, Japan by 13.0%, ASEAN by 15.1%, South Korea by 17%, and the European Union by 12.6%.

 

German Industrial Production Fell for 4th Consecutive Month In September

Germany's industrial production declined for the fourth month in a row, highlighting ongoing economic weakness in the Euro Area's largest economy.

Industrial production declined 1.4% in September from the previous month, following the downwardly revised 0.1% fall in August, Destatis reported Tuesday.

On an annual basis, industrial production declined 3.7% from a year ago.

The sharp fall of 5% from the previous month in automobile production led to the decline in the month, followed by a 4.4% decline in electrical equipment and a 9.2% fall in the pharmaceutical industry, offset by a 4.1% rise in mechanical engineering.

Outside the manufacturing industry, energy production fell by 1.7% in September, and construction production was unchanged from the previous month.

 

Record Decline In Eurozone Producer Prices In September 

Industrial producer prices declined 12.4% from a year ago in the euro area in September, Eurostat reported Tuesday.

The measure of wholesale prices dropped at the fastest pace on record, driven by a 31.3% plunge in energy prices and 4.8% in intermediate goods.

Meanwhile, prices rose at a slower pace of 3.9% compared to 4.4% in August for capital goods, durable goods inflation eased to 4.3% from 4.7%, and non-durable consumer goods slowed to 5.5% from 6.6%.

Excluding energy, producer price inflation decelerated to 0.5% from a year ago in September, down from 1.0% in August.

On a monthly basis, producer prices rose by 0.5%, the second month of an increase in a row.

 

UK Home Prices Extended Decline In October 

UK home prices continued to fall in October as buyers struggled with elevated home prices and surging mortgage rates.

The Halifax House Price Index fell 3.2% from a year ago in October, following a revised 4.5% in September, Halifax and the Bank of Scotland reported Tuesday.

On an annual basis, home prices declined in all regions across the UK, with the Southeast leading with a fall of 6.0% and London property prices easing by 4.6%.

On a monthly basis, home prices rose 1.1%, following a decline for six months in a row due to the lack of availability of homes for sale.

 

Europe Indexes and Yields

The DAX index increased 0.1% to 15,152.64, the CAC-40 index fell 0.4% to 6,986.23, and the FTSE 100 index fell 0.1% to 7,410.04.

The yield on 10-year German bonds decreased to 2.70%, French bonds traded lower to 3.29%, the UK gilts edged down to 4.30%, and Italian bonds inched higher to 4.52%.

The euro rebounded to $1.069, the British pound at $1.232, and the U.S. dollar at 89.99 Swiss cents.

Brent crude decreased $2.94 to $82.93 a barrel, and the Dutch TTF natural gas edged higher by €1.23 to €46.06 per MWh.

 

Europe Stock Movers

Energy and resource companies were in focus after China reported mixed international trade data and tensions in the Middle East receded.

BP plc fell 1.2% to 485.40 pence, Shell PLC dropped 1.5% to €30.79, and TotalEnergies SE eased 1.4% to €61.76.

UBS Group AG gained 3% CHF 22.54 after the Swiss banking group reported progress in trimming costs and stronger-than-expected client inflows.

Total revenue in the third quarter increased to $11.7 billion from $8.2 billion, and operating profit before-tax swung to a loss of $255 million from $2.3 billion. 

Underlying profit before-tax, which excludes Credit Suisse integration charges, decreased to $844 million from $2.0 billion a year ago. 

Watches of Switzerland Group PLC jumped 8.2% to €6.55 after the luxury watch retailer reported improving sales in its fiscal second quarter, and the retailer set the target to double its sales and profit by fiscal year 2028.

Persimmon plc increased 4.6% to 1,132.0 pence after the UK-based home builder lifted its estimate of new home completions.

Associated British Foods plc soared 6.4% to 2,237.0 pence after the Primark owner reported a 5% increase in annual income and the food company declared a special dividend.

Engie SA increased 2.1% to €15.46 after the French energy company said operating earnings for the nine-month period rose 14.7% to €8.3 billion from €7.3 billion in the same period a year ago.

The company also revised its annual outlook.