Rate Stability Hopes Support U.S. Market Indexes, Deadly Storm system Devastate Black Sea Region

Barry Adams
28 Nov, 2023
New York City

Stocks lacked direction, and investors reviewed economic data and the Fed's monetary policy stance after strong gains in the previous four weeks in a row.

Market indexes edged up after Fed Governor Christopher Wallace stressed that the central bank's policy is "well positioned" to slow the economy and lower inflation to 2%.

Governor Wallace's comments supported the view that the Federal Reserve is done raising rates for now. 

Investors are awaiting the release of the PCE Price Index, an alternative measure of inflation, and the recent decline in inflation has bolstered the case for the third rate pause in a row at the end of the policy meeting ending on December 13.

Benchmark indexes edged slightly lower in Monday's trading, and investors weighed recent market gains against the earnings outlook, economic growth projections, and holiday sales.

E-commerce-linked stocks advanced after Black Friday sales jumped 7.5% to $9.8 billion from a year ago to a record high, according to the data released by Adobe Analytics.

Sales between Black Friday and Cyber Monday soared 7.7% to $10.3 billion, and sales are expected to cross $12 billion on the busiest shopping day of the year.

The S&P 500 index has jumped 19.2%, and the Nasdaq Composite has advanced 37.2% in the year so far, after the Federal Reserve paused rate hikes at the conclusion of the last two meetings.

 

U.S. Indexes and Yields

The S&P 500 index edged down 0.002% to 4,549.43, and the Nasdaq Composite increased 0.01% to 14,243.07.

The yield on 2-year Treasury notes increased to 4.88%, 10-year Treasury notes inched higher to 4.40%, and 30-year Treasury bonds edged higher to 4.54%.

Crude oil advanced on the hopes of a deeper production cuts from OPEC+ member nations.

Separately, Kazakhstan slashed its production at three largest oil fields by 56% after storms on the Black Sea curtailed shipment around Caspian Sea.   

The storms were part of a weather system that knocked power off in several countries including Moldova, Bulgaria, Serbia, Romania and also forced evacuations in Southern Ukraine and Russia. 

Oil loading was halted at the port of Novorossiysk after wind speed crossed 50 miles per hour and waves surged above 25 feet. 

Crude oil increased $1.80 to $76.65 a barrel, and natural gas prices rose 1 cent to $2.95 a thermal unit.

Gold increased $27.18 to $2,040.77 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 102.81.

 

U.S. Stock Movers

Zscaler decreased 5.2% to $182.0 after the cybersecurity company reported strong gains in quarterly sales and operating earnings.

Stock fell after the company reiterated its fiscal year revenue outlook between $2.09 billion and $2.10 billion.

E-commerce-related stocks advanced following a surge in online shopping during the Thanksgiving holiday.

In Monday's trading, Shopify jumped as much as 4%, Amazon gained 1%, Etsy advanced 5%, and Wayfair edged slightly higher.

 

European Market Sentiment Weak as Inflation Worries Weigh 

European stock markets were under pressure ahead of the release of inflation data in the Euro Area and leading nations of the currency union.

Market participants are anticipating overall inflation in October to range between 2.5% and 4% in the currency union, Germany, France, Spain, and Italy.

Benchmark indexes in the region declined, and inflation jitters kept market sentiment down for the second day in a row.

Overall, inflation has been steadily declining for the last eight months in a row in the Euro Area, but prices are still rising faster than the European Central Bank's target rate of 2%.

The decline in inflation is primarily reflecting lower energy prices, and despite the multiple rate hikes, inflation has been stubbornly anchored in the broader economy.

Moreover, market anxieties were high ahead of the OPEC+ meeting on Thursday, and oil-producing nations are struggling to agree on production quotas.

 

German Consumer Morale Stayed Weak 

German consumer morale stayed weak amid a lack of progress on the broader economic recovery, the GfK Group reported Tuesday.

Germany's GfK Consumer Climate Index inched higher to -27.8 for December from a downwardly revised -27.3 in November.

Economic expectations were nearly unchanged despite the worries of high interest rates, elevated inflation, and economic uncertainties.

 

Sustained Improvement in French Consumer Morale

The consumer confidence in France increased to 87 in November, the statistical institute of France, INSEE, reported Tuesday.

The confidence level increased to the highest level since April 2022, a 19-month high, after consumers were more optimistic about the outlook for the standard of living and expectations for their personal financial situation; however, worries about employment rose sharply.

 

Eurozone Bank Lending Drops to New 8-year Low

Bank lending to households in the Euro Area rose by 0.6% from a year ago in October, the European Central Bank reported Tuesday.

The increase in lending to households was the smallest since June 2015, after demand for credit decelerated on the steady rise in interest rates.

Meanwhile, lending to corporations declined by 0.3%, the first decline since July 2015.

But overall lending to the private sector, including households and non-financial institutions, rose by 0.4% in October from 0.2% in September.

 

Europe Indexes and Yields

The DAX index increased 0.2% to 15,992.67, the CAC-40 index fell 0.2% to 7,250.13, and the FTSE 100 index declined 0.1% to 7,455.24.

The yield on 10-year German bonds decreased to 2.54%; French bonds traded lower to 3.10%; the UK gilts declined to 4.21%; and Italian bonds inched lower to 4.32%.

The euro rebounded to $1.095, the British pound at $1.265, and the U.S. dollar at 88.09 Swiss cents.

Brent crude increased $1.88 to $81.85 a barrel, and the Dutch TTF natural gas declined by €1.27 to €42.77 per MWh.