Investors Look for New Highs In U.S. Major Indexes Amid Economic and Regulatory Optimism

Barry Adams
05 Dec, 2024
New York City

Stock market indexes on Wall Street traded in a tight range in early trading on Thursday, and investors looked forward to the release of the nonfarm payrolls report on Friday. 

The S&P 500 index edged up 0.01%, and the Nasdaq Composite advanced 0.02%, as investors reviewed the latest weekly jobless claims report. 

The S&P 500 index and the Nasdaq Composite closed at new record highs on Wednesday, and the Dow Jones Industrial Average closed above 45,000 for the first time. 

Investors are holding out for the market rally to continue in December and in the first quarter of 2025, driven by solid economic data, resilient labor markets, and hopes of regulatory overhaul. 

Initial jobless claims rose to 224,000 in the week ending on November 30, from 223,000 in the previous week, according to data available from the U.S. Department of Labor. 

Continuing claims from those who are jobless for more than a week declined by 25,000 to 1.871 million at the end of November 23, confirming that the labor market conditions are still tight. 

Despite the Federal Reserve's eleven rate hikes over 2022 and 2023, labor markets are resilient, and jobless claims are hovering near record lows. 

Federal Reserve Chairman Jerome Powell said that the U.S. economy is strong enough and labor markets are surprisingly more resilient than estimated, providing an economic backdrop for the Fed to move carefully on interest rate cuts. 

“The labor market is better, and the downside risks appear to be less in the labor market,” said Fed Chair Powell during an onstage interview at the DealBook conference organized by the New York Times on Wednesday. 

“Growth is definitely stronger than we thought, and inflation is coming out a little higher. 

So, the good news is that we can afford to be a little more cautious as we try to find neutral.”

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.03% to 6,088.13, the Nasdaq Composite rose 0.2% to 19,777.73, and the Russell 2000 index inched higher by 0.4% to 2,426.56. 

The yield on 2-year Treasury notes edged lower to 4.16%, 10-year Treasury notes inched down to 4.21%, and 30-year Treasury bonds decreased to 4.37%.

WTI crude oil increased $0.10 to $68.63 a barrel, and natural gas prices edged up 3 cents to $3.08 a thermal unit.

Gold increased by $0.90 to $2,651.23 an ounce, and silver rose by $0.03 to $31.36. 

The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower by 0.29 to 106.08.

Stock Movers 

American Eagle Outfitters dropped 14.5% to $17.57, and the apparel retailer reported weaker-than-expected quarterly results. 

Total revenue in the third quarter ending on November 2 declined 1% to $1.3 billion, including a $45 million reduction in sales because of a calendar shift in the current period. 

Comparable store sales in the quarter increased, following a 5% increase last year. 

Net income dropped to $80.0 million from $96.7 million, and diluted earnings per share fell to 41 cents from 49 cents a year ago. 

The company estimated fourth quarter total revenue to fall 4%, including an adverse effect of $85 million because of the calendar shift and one fewer week in the period. 

The retailer also guided operating income to range between $125 million and $130 million, including a negative impact of $20 million because of the strengthening of the U.S. dollar. 

Five Below rose 14.3% to $120.11 after the deep discount retailer reported better-than-expected revenue and adjusted earnings in the third quarter. 

Net sales increased by 14.6% to $843.7 million from $736.4 million a year ago; comparable sales increased by 0.6%. 

Net income plunged to $1.7 million compared to $14.6 million, and diluted earnings per share were 3 cents compared to 26 cents, and adjusted diluted earnings per share were 42 cents. 

Synopsys dropped 7% to $547.0 after the advanced chip design software company's outlook for the fiscal first quarter fell short of market expectations. 

Revenue in the fiscal fourth quarter ending in October rose 11% to $1.64 billion, net income decreased to $279.3 million from $346.1 million, and diluted earnings per share fell to $1.79 from $2.23 a year earlier. 

For the full fiscal year 2024, net income increased to $1.44 billion from $1.23 billion, and diluted earnings per share rose to $9.25 from $7.91. 

The electronic design automation company estimated fiscal 2025 first quarter revenue to range between $1.435 billion and $1.465 billion and diluted earnings per share to range between $1.81 and $1.95.