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.