Markets Head for Third Weekly Gains, Crude Oil Drops Fourth Consecutive Week

Barry Adams
17 Nov, 2023
New York City

Benchmark indexes looked higher in early trading, and investors hoped that the recent market advance would hold in Friday's trading.

The S&P 500 index advanced 0.3% and the Nasdaq Composite gained 0.1%, and two widely followed indexes are set to close higher for the third week in a row.

In November, the Nasdaq gained 9.8%, and the S&P 500 index advanced 7.5% to Thursday's close.

Three inflation reports—the consumer price index, the producer price index, and the import price index—showed weakening inflationary pressures, encouraging investors to add exposure to interest rate-sensitive stocks.

Investors were also encouraged by the stable rate outlook for the next two months, and most investors are factoring in that the Federal Reserve is likely to hold rates at the end of the next meeting in December.

Crude oil prices rebounded after dropping more than 5% in the previous session due to rising U.S. supplies, elevated inventories, and worries about an uncertain demand outlook in China.

Crude oil prices are set to close down for the fourth week in a row, and the decline in the period is approaching a bear market plunge.

 

U.S. Indexes and Yields

The S&P 500 index jumped 0.3% to 4,509.12, and the Nasdaq Composite added 0.1% to 14,107.05.

The yield on 2-year Treasury notes decreased to 4.83%, 10-year Treasury notes inched lower to 4.41%, and 30-year Treasury bonds edged down to 4.59%.

Crude oil increased $0.82 to $73.72 a barrel, and natural gas prices held steady at $3.06 a thermal unit.

Gold increased 0.4%, or $8.64, to $1,989.88 an ounce after bond yields traded down after the interest rate hike worries receded.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.16.

 

U.S. Stock Movers

Gap Inc. jumped 18.7% to $16.21 after the apparel retailer reported quarterly results.

Revenue in the fiscal third quarter decreased 7% to $3.8 billion from $4.0 billion, net income dropped to $218 million from $282 million, and diluted earnings per share fell to 58 cents from 77 cents a year ago.

The decline in net sales included a negative impact of 2 percentage points on the sales of Gap China.

Comparable sales declined 2%, and online sales fell 8% from the previous year and represented 38% of total sales.

Gross margin improved 390 points to 41.3% after commodity prices eased and the promotional environment improved.

Bath & Body Works edged higher by 0.8% after falling 7% in the previous session to $30.10 after the specialty retailer estimated lower sales in the fiscal year.

Revenue in the third quarter declined 2.6% to $1.56 billion from $1.60 billion, net income advanced to $119 million from $91 million, and diluted earnings per share rose to 52 cents from 40 cents a year ago.

The company estimated full-year sales to decline between 2.5% and 4.0% from $7.56 billion and diluted earnings per share between $2.99 and $3.19.

ChargePoint Holdings plunged 30% to $2.19 after the company lowered its third-quarter revenue estimate and announced a management shakeup.

The company lowered its third-quarter revenue estimate to between $108 million and $113 million from the previous range of between $150 million and $165 million.

The company blamed the revenue shortfall on weak macroeconomic conditions and delays in fleet and commercial electric vehicle delivery.

Applied Materials dropped 7.2% to $143.55 after the company reported quarterly earnings, but a criminal investigation by the Department of Justice for shipments to China weighed on the stock.

Revenue in the fiscal fourth quarter ending in October was flat at $6.7 billion, and gross margin improved to 47.1% from 45.9% a year ago.

Net income advanced to $2.0 billion from $1.6 billion, and diluted earnings per share rose to $2.38 from $1.35 a year ago.

In fiscal 2023, the company generated a record $8.70 billion in cash from operations and distributed $3.16 billion to shareholders, including $2.19 billion in share repurchases and $975 million in dividends.

In the first quarter of fiscal 2024, Applied expects net sales to be approximately $6.47 billion, with a band of $400 million, and adjusted diluted earnings per share between $1.72 and $2.08.