U.S. Stocks On Hold After Rallying In Previous Three Weeks, Open AI and Microsoft In Focus

Barry Adams
20 Nov, 2023
New York City

U.S. stock futures rested near the flatline ahead of the start of holiday-shortened trading this week.

U.S. markets will be closed Thursday to celebrate the Thanksgiving holiday, and trading will close early on Friday.

Investors are looking to extend the three-week rally after consumer price inflation, producer price inflation, and import inflation indexes declined.

The weakening inflationary forces raised hopes that the central bank has greater-than-expected flexibility in keeping economic growth intact while cooling inflation and supporting labor market expansion.

After consumer price inflation dropped to 3.2% in October, investors raised the possibility of a rate cut in early 2024 and drove growth stocks higher for the third week in a row.

But there are warning signs on the horizon, and despite resilient consumers, retail sales declined 0.1% in October unadjusted for inflation, the first decline in seven months.

Moreover, the largest U.S. retailers, Walmart, Home Depot, and Macy's, also offered a cautious outlook for holiday sales.

 

German Producer Prices Drop 4th Consecutive Month, China Holds Rates

On the global economic front, the People's Bank of China held its 1-year loan prime rate at 3.45% and its 5-year rate at 4.2%.

The one-year rate has been held steady since August, when it was lowered from 3.55%, and the 5-year rate has been held steady since June, when it was lowered from 4.3%.

Germany's producer prices fell 11% from a year ago in October, Destatis reported today.

The measure of producer inflation decreased for the fourth month in a row due to the sharp decline in energy prices.

The annual decline in inflation in September was 14.7%, which was the largest fall since record-keeping began in 1949.

 

U.S. Indexes and Yields

The S&P 500 index edged slightly lower to 4,511.02, and the Nasdaq Composite was unchanged at 14,124.93.

The yield on 2-year Treasury notes increased to 4.91%, 10-year Treasury notes inched higher to 4.46%, and 30-year Treasury bonds edged higher to 4.62%.

Crude oil increased $1.06 to $77.11 a barrel, and natural gas prices fell 7 cents to $2.77 a thermal unit.

Gold decreased 0.3%, or $5.42, to $1,977.48 an ounce on the receding fears of inflation.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.51.

 

U.S. Stock Movers

Microsoft increased 1.4% to $374.85 after chief executive Satya Nadella said ousted OpenAI chief Sam Altman will lead a new AI research team at Microsoft.

Nvidia gained 0.7% to $496.51 ahead of the company's quarterly results on Tuesday.

The advanced chipmaker is estimated to report at least $3.08 per diluted share on revenue of $14.89 billion, compared to 58 cents a share and $5.93 billion in revenue a year ago.

Zoom Video Communications Inc. rose 0.6% to $64.50 ahead of the company's quarterly results after the close on Monday.

The video communication company estimated revenue in the fiscal third quarter ending in October between $1.15 billion and $1.2 billion and non-GAAP adjusted earnings between $1.07 and $1.09.

Previously, Zoom had estimated revenue in fiscal 2024 ending in January to range between $4.485 billion and $4.495 billion and adjusted earnings per share between $4.63 and $4.67.