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S&P 500 ends lower on mixed Fed messages, PCE on deck

Published 11/29/2023, 06:27 AM
Updated 11/29/2023, 07:35 PM
© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., November 17, 2023.  REUTERS/Brendan McDermid/File Photo

By Stephen Culp

NEW YORK (Reuters) - U.S. stocks edged lower on Wednesday as a robust upward GDP revision eased recession fears, while Federal Reserve officials' remarks raised questions about the duration of the central bank's restrictive policy.

The Nasdaq joined the S&P 500 in negative territory, while the Dow ended nominally higher, as investors took a wait-and-see position ahead of Thursday's crucial personal consumption expenditure (PCE) inflation report.

Despite the indexes' languid movement over the last three sessions, November has been a banner month. The S&P 500 remains on track to notch its biggest monthly percentage gain since July 2022.

"The market has had huge returns, so there's certainly profit taking and repositioning; there's some consolidation going on here," said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York. "We've had very strong earnings and there's a lot of optimism. And because of that, there's a repositioning of gains."

In contrast to Barkin, Fed Governor Christopher Waller, widely considered a hawk, provided reassurance on Tuesday that the Fed has probably reached the end of its rate hike cycle. He hinted at the possibility of cutting rates in the near term to engineer a "soft landing" and avoid recession.

"The Fed's on hold now, but the mantra is still higher for longer," Ghriskey added. "The economy continues to be relatively strong. There's no reason for the Fed to lower rates and risk a re-emergence of inflation."

Indeed, on Wednesday Cleveland Fed President Loretta Mester reiterated the central bank's need to remain "nimble" in its response to economic data.

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Earlier in the session the Commerce Department upwardly revised its initial estimate on third-quarter gross domestic product, which underscored U.S. economic resilience but also appeared to give the Fed little reason to start cutting rates in the near future, as long as inflation remains well above its 2% target.

The Fed's Beige Book, which provides a region-by-region snapshot of the U.S. economy, was released mid-afternoon, showing economic activity has slowed modestly under the central bank's restrictive monetary policy.

The Dow Jones Industrial Average rose 13.44 points, or 0.04%, to 35,430.42, the S&P 500 lost 4.31 points, or 0.09%, at 4,550.58 and the Nasdaq Composite dropped 23.27 points, or 0.16%, to 14,258.49.

Among the 11 major sectors of the S&P 500, real estate and financial notched the largest percentage gains, while communications services dropped 1.1%.

Interest rate sensitive momentum stocks, led by Microsoft Corp (NASDAQ:MSFT) and Apple Inc (NASDAQ:AAPL) were the heaviest weights on the S&P 500.

Shares of Humana Inc (NYSE:HUM) and Cigna (NYSE:CI) Group were down 5.5% and 8.1%, respectively, after a source familiar with the matter said the health insurers are in talks to merge.

General Motors (NYSE:GM) jumped 9.4% after the automaker announced a $10 billion share buyback and a 33% dividend boost. Ford Motor (NYSE:F) Co shares advanced 2.1%.

CrowdStrike Holdings (NASDAQ:CRWD) surged 10.4% following its consensus-beating fourth-quarter revenue forecast.

NetApp (NASDAQ:NTAP) leaped 14.6% after the cloud-based data management platform increased its annual profit forecast.

Advancing issues outnumbered decliners on the NYSE by a 2.06-to-1 ratio; on Nasdaq, a 1.51-to-1 ratio favored advancers.

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The S&P 500 posted 30 new 52-week highs and one new low; the Nasdaq Composite recorded 82 new highs and 97 new lows.

Volume on U.S. exchanges was 11.42 billion shares, compared with the 10.45 billion average for the full session over the last 20 trading days.

Latest comments

Housing market recession and freight recession are precursors to broader economic recession. Yield curves still inverted. Once the FED starts lowering rates, the curves will uninvert and the recession will begin in earnest.
The market just hangs on every word these nimrods speak lmao
Rigged by smoke lmao. Fact is coming with -500 correction
the smart money  / dumb money indicator is at extremes  - dumb money buying in and the smart money is not buying - and starting to build short positions
You're the dumb money
a remarkable repeat of 07 and 08 - all the same indicators doing all the same things
meanwhile the Reverse Repo funding that central banks are providing to high street and regional banks around the world is at an all time high - under the hood, this is a very sick economy with many banks on the verge of collapse
Gold will rise at the same time of the Nasdaq today and they make their correction when you sleep. It is so easy to guess. Always the same programmed pricing.
On the Nasdaq, the most expensive share, Amazon, is trading at over 83 times estimated net profit for 2023! This ratio rises to 35.4 for Microsoft, 32.1 for Apple and 22.3 for Alphabet. This is well above the average for Nasdaq companies (18.9), the flagship index for US technology stocks. Message to the speculative banks: when will the US indices have their healthy correction ? At these prices, wait & see.
wait for OPEc plus to announce production cuts for next year - Saudi needs oil above 80 USD a barrel - and then inflation returns - if inflation doesn't return, it means there's so little oil demand in the world, even after massive cuts, that the GDP figures are totally phoney
inflation returns to what?  the current mid 3% had already priced in the $70-80 oil price range
US needs oil higher for SA purchase of US government bonds.
economic growth revised massively upwards - looks like more work to be done at the FED-  higher for longer!!!! Good news is bad news
What a hopium
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