Rate Optimism Drives U.S. Averages Higher for Fifth Consecutive Week

Barry Adams
29 Nov, 2023
New York City

Market indexes advanced on Wall Street, and Treasury yields drifted lower on a stable rate outlook.

The S&P 500 index and the Nasdaq Composite advanced 0.2% in pre-market trading on the hopes that the Federal Reserve is more likely to hold interest rates at the end of the next policy meeting in two weeks.

The S&P 500 index has advanced about 8% and the Nasdaq Composite has gained about 11% in November, amid optimism that the interest rates are closer to peak rates.

Furthermore, the focus of the investor debate has shifted to the timing and magnitude of interest rate cuts in 2024.

The long-foreseen U.S. economic recession is now not likely to materialize in 2024, but investors worry that rates are likely to stay above 5% for most of 2024.

 

U.S. Indexes and Yields

The S&P 500 index edged up 0.1% to 4,561.04, and the Nasdaq Composite increased 0.2% to 14,252.36.

The yield on 2-year Treasury notes decreased to 4.69%, 10-year Treasury notes inched lower to 4.29%, and 30-year Treasury bonds edged higher to 4.47%.

Crude oil increased $1.68 to $77.89 a barrel, and natural gas prices rose 1 cent to $2.82 a thermal unit.

Gold increased $1.10 to $2,040.96 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 102.83.

 

U.S. Stock Movers

General Motors jumped 8.5% to $31.35 after the vehicle maker announced a $10 billion stock buyback, raised its dividend, and reinstated its annual outlook.

The company estimated net income attributable to stockholders between $9.1 billion and $9.7 billion, compared to the previous outlook of $9.3 billion and $10.7 billion.

Diluted earnings per share in the $6.52 to $7.02 range, including the estimated impact of the accelerated stock repurchase, compared to the previous outlook of $6.54 to $7.54

The vehicle maker said it plans to increase its dividend by 33%, or 3 cents per quarter, to 12 cents, beginning with the declaration in January 2024.

GM had about 1.37 billion outstanding shares prior to the announcement of the accelerated stock repurchase program.

Foot Locker jumped 8.5% to $25.85 after the specialty athletic retailer reported better-than-expected quarterly results.

Revenue in the fiscal third quarter ending in October declined 8.6% to $1.99 billion from $2.17 billion, and comparable store sales fell 8.0%.

The company attributed the decline in sales to "ongoing consumer softness," and the closure of Champ stores negatively impacted same-store sales by 3 percentage points.

Net income in the quarter decreased to $28 million from $96 million, and diluted earnings per share dropped to 30 cents from $1.01 a year ago.

The retailer tightened its full-year revenue growth estimate to between 8.0% and 8.5% from the previous guidance between 8.0% and 9.0%, and comparable sales growth to range between 8.0% and 8.5% from 8.0% to 9.0%.

The company entered into a long-term licensing agreement with two retailers in India and will commence sales operations in 2024.

During the third quarter, the company paid a quarterly dividend of $0.40 per share for a total of $38 million and did not repurchase any shares.