The Dow Jones Industrial Average rose slightly on Thursday, avoiding its third straight day of losses amid an uptick in Covid-19 cases as well as weak employment data. The S&P 500 and Nasdaq Composite moved higher bolstered by a rally in Big Tech shares.
- Dow closed up 0.15% for its first positive day in three
- This week, the Dow is up 0.01% on pace for its third-straight weekly gain
- This year, the Dow is up 3.31%
- S&P 500 closed up 0.39%
- This week, the S&P 500 is down 0.09%
- This year, the S&P 500 is up 10.87%
- Nasdaq Composite closed up 0.87% for its first positive day in three
- This week, the Nasdaq is up 0.64%
- This year, the Nasdaq is up 32.68%
- Russell 2,000 small caps closed up 0.84%
- This week, small caps are up 2.3%, on pace for their third-straight weekly gain
- This week, small caps are up 6.93%
- Nine out of 11 sectors were positive Thursday led by energy up 1.52%
— Gina Francolla, Maggie Fitzgerald
The major averages closed in the green on Thursday, supported by a rally in technology shares. The Dow Jones Industrial Average closed up about 42 points after being in the red for much of the session. The S&P 500 ticked nearly 0.4% higher. The Nasdaq Composite outperformed, gaining 0.87%.
— Maggie Fitzgerald
Amid a surge in Covid-19 cases in the U.S., Senate Majority Leader Mitch McConnell, R-Ky., will resume negotiations with Democratic leadership surrounding a second stimulus bill, Sen. Chuck Schumer, D-N.Y., said on Thursday.
"Last night, they've agreed to sit down and the staffs are going to sit down today or tomorrow to try to begin to see if we can get a real good Covid relief bill," the minority leader said during a press conference in New York. "So there's been a little bit of a breakthrough in that McConnell's folks are finally sitting down and talking to us."
Money Report
— Maggie Fitzgerald
The Dow Jones Industrial Average traded up about 35 points with about an hour left in the trading day. The 30-stock average spend much of the day in negative territory but was lifted by a rally in Big Tech shares in the afternoon. The S&P 500 rose 0.25%. The Nasdaq Composite rose more than 0.8%.
— Maggie Fitzgerald
The dissipating uncertainty around the U.S. election and the positive news around several Covid-19 vaccine candidates led to one of the sharpest declines on record for the Cboe Volatility Index (VIX) on record, according to Goldman Sachs.
Strategists at the bank pointed out that the VIX posted its fastest-ever decline from above 40 to below the 25 level between late October and early November. Specifically, the move happened between Oct. 28 and Nov. 6.
"The past two weeks have brought substantially more clarity to the US election and coronavirus vaccine themes that have been contributing to elevated implied volatility over the past few weeks," they said in a note.
—Fred Imbert, Michael Bloom
Billionaire hedge fund manager Bill Ackman, who made a fortune betting against the markets earlier this year, said he's bullish on stocks in 2021, but investors will need to get through a "tragic" year-end first.
"We think the next couple of months unfortunately are going to be tragic and very difficult for the globe and for our country in particular," Ackman said on a Pershing Square quarterly earnings call Thursday. "We have basically a 9/11 every day."
— Yun Li
Paul Schatz, president of Heritage Capital, advised investors use the recent market declines as buying opportunities, but should also be mindful of the risks the market faces.
In a post, Schatz said the stock market's "foundation is pretty darn solid," noting the NYSE Advance/Decline line has made fresh all-time highs recently while the high yield bond market currently "indicates little stress in the financial system.
"A pause to refresh or mild pullback should be expected, but any and all weakness is a buying opportunity until proven otherwise," he said. However, Schatz added that market sentiment was a bit "frothy" as investors are "a little too happy and confident here."
—Fred Imbert
Here are some of the stocks making notable moves so far on Thursday.
Shopify – Shares of the e-commerce company rose more than 5% after Jefferies upgraded the stock to a buy rating.
L Brands — Shares of the parent company of Victoria's Secret and Bath & Body Works surged more than 14% after posting blowout quarterly results.
Nasdaq — Shares of stock exchange firm gained 2.7% after Nasdaq announced a deal to acquire Verafin, a software company which specializes in preventing financial crimes.
Check out more movers here.
— Jesse Pound
The increasing presence of mortgage companies in the home loan industry poses potential risks to the financial system in times of duress, Federal Reserve Governor Michele Bowman said Thursday. In fact, Bowman noted nonbank lenders hold a greater share of mortgages than they did prior to the financial crisis. Should the system freeze up and delinquencies and foreclosures mount, that could pose problems. "Clearly, there is considerable potential for harm to consumers, and that harm would likely be concentrated in communities that are traditionally underserved," Bowman said during a financial stability conference presented by the Cleveland Fed. While she noted that rescue programs from the Fed and Congress helped stabilize the system in the early days of the coronavirus pandemic, she cautioned that regulators should be aware of the potential risks if the situation should worsen. "Today's housing market is much more robust, and the risk of a financial crisis originating from this sector is currently low. Nonetheless, if some large mortgage companies fail and other firms do not step in to take their place, we could see adverse effects on credit availability," she said. – Jeff Cox
The Dow Jones Industrial Average and S&P 500 were down by 0.5% and 0.2%, respectively, around midday as the rising number of coronavirus cases made value stocks dependent on a strong economic recovery less appealing.
The iShares Russell 1000 Value ETF (IWD) fell 0.3%. Its growth counterpart, the iShares Russell 1000 Growth ETF (IWF) gained 0.5% as names that thrived amid strict lockdown measures outperformed. This helped the Nasdaq Composite rise by 0.6%.
Value stocks have outperformed for most of November, boosted by news around potential coronavirus vaccines. IWD is up more than 11% month to date while IWF has gained 8% in November.
—Fred Imbert
With some people saying business travel could fall drastically in the wake of Covid-19, Pershing Square's Bill Ackman doesn't see a slowdown. On Thursday during his firm's third quarter earnings call, he said he's expecting a "dramatic snapback in business travel" once people feel safe again. "You don't want to be the last guy to show up at your client versus your competitors," he added. Pershing Square has a position in Hilton.
— Pippa Stevens
Tesla shares rose to a fresh all-time high, briefly rising as much as 4.3% to $507.76 per share before easing from that level. Thursday's gains built on Tesla's strong weekly performance following S&P Dow Jones Indices announcing late Monday the electric car maker would be added to the S&P 500. Week to date, Tesla shares are up more than 23%.
—Fred Imbert
Strategists at MRB Partners pointed out that global financial stocks have broken above a range that persisted between June and November. This, combined with the prospects of rising rates around the world in the years ahead, makes the space attractive for an overweight position.
"Looking ahead, an economic recovery and moderate rise in interest rate points to an improvement in absolute earnings with the potential for relative earnings to also rise over the next 1-2 years," the strategists wrote in a note. "Global financials represent an appealing earnings recovery and re-rating play as the global economy improves and interest rates gradually rise from ultra-low levels."
—Fred Imbert
Small businesses had higher cash balances year over year at the end of September thanks in part to government stimulus and the Paycheck Protection Program, according to a new report from JPMorgan Chase Institute.
The report, which analyzed banking data from 1.3 million small businesses, shows that revenue and expenses were down a similar amount compared with September 2019, but cash balances were up 35%.
"JPMC Institute data shows that while many small businesses had substantially increased cash liquidity over the summer months, expense growth did not materially outpace revenue growth through September," the report said.
However, the authors of the report warn that the high cash balances may be due in part to deferred payments and lower expenses that may not be sustainable long term. The data also does not reflect changes in business from the latest wave of public health restrictions in U.S. cities.
— Jesse Pound
Tesla traded as high as $499.50 on Thursday, putting it less than 1% away from its Sept. 1 intraday all-time high of $502.49. On Monday S&P Dow Jones Indices announced that the electric vehicle maker will be added to the S&P 500 in December, which kicked off a rally in shares of Tesla.
— Pippa Stevens
Stocks opened lower on Thursday, putting the major averages on track for their third straight day of losses. The Dow slid 140 points for a loss of 0.48%. The S&P 500 and Nasdaq Composite declined 0.4% and 0.1%, respectively.
— Pippa Stevens
Fundstrat Global Advisors' Tom Lee raised his 2020 year-end S&P 500 target on Thursday. The strategist, who correctly called the bottom for stocks in March, sees the benchmark index hitting 3,800 by the end of the year.
Read more about Lee's call, and the 10 catalysts he sees driving stocks, here.
— Pippa Stevens
Value investors may finally start to regain some ground against their growth counterparts as the recent slew of positive coronavirus vaccine news raises hope of a strong economic recovery, said Cresset Wealth's Jack Ablin.
"It's been a rough dozen years for value investors, but the tide may be turning in their favor," said Ablin, the firm's founding partner, in a post. "Relatively cheaper valuations should enable this beleaguered group opportunity to catch up."
Value stocks have left growth names in the dust this month. The iShares Russell 1000 Value ETF (IWD) has gained more than 11% in November. Meanwhile, the iShares Russell 1000 Growth ETF (IWF) is up just 7.5% over that time period.
However, Ablin noted that investors "must be picky" when buying into value stocks. "Value investors must demand their companies possess strong balance sheets and enjoy pricing power to lead the way over next market cycle."
—Fred Imbert
First-time filings for unemployment claims came in at 742,000 last week, higher than an estimate of 710,000, according to economists surveyed by Dow Jones.
— Yun Li
- Mizuho raised its price target on Square to $300 from $225.
- Jefferies upgraded Shopify to buy from hold.
- KBW upgraded Citi to outperform from market perform.
- KBW downgraded JPMorgan to market perform from outperform.
- Morgan Stanley named Wynn a preferred U.S. gaming stock.
- DA Davidson upgraded Wells Fargo to buy from neutral.
- Citi named Marvell a top pick.
- Argus upgraded Marriott to buy from hold.
Pro subscribers can read more here.
-Michael Bloom
Shares of Macy's ticked more than 4% lower in premarket trading on Thursday after the department store retailer reported a same-store sales decline of more than 20%. Macy's, however, posted earnings and revenue that topped analyst expectations. Macy's reported a loss of 19 cents on revenue of $3.99 billion. Wall Street was expecting a loss of 79 cents on revenue of $3.86 billion, according to Refinitiv.
Digital sales grew 27%, but those gains weren't enough to offset losses at its stores.
— Maggie Fitzgerald
A vaccine being developed by the University of Oxford and AstraZeneca triggered a similar immune response across all adults, according to preliminary data released Thursday.
"In this study, we have … been trying to examine the immune responses in older adults and address this question that has been out there about as you get older whether the immune system is less able to respond," Professor Andrew Pollard, the head of Oxford's vaccine trial team, said during a media briefing on Thursday.
"And these first data are really encouraging … showing that we are getting very good immune responses — even in the over 70s, which look very similar to those in younger adults," Pollard added.
U.S. stock futures recovered some of their losses after the trial data was released release.
—Fred Imbert, Sam Meredith
At 8:30 am E.T. the U.S. Department of Labor will release the latest employment data, giving investors a read on the ongoing economic recovery. Economists are expecting initial jobless claims to come in at 710,000, according to Dow Jones.
The consensus estimate is largely in-line with last week's 709,000 reading, which was below estimates for 740,000 claims.
— Pippa Stevens
Stocks futures pointed to a slightly lower open on Thursday, following two consecutive days of losses for the major averages. Futures tied to the Dow Jones Industrial Average dipped 52 points, indicating a loss of about 38 points at the open. S&P 500 futures traded 0.1% lower, while Nasdaq 100 futures fell 0.2%. Investors will monitor the latest jobless claims data this morning as the country grapples with rising new coronavirus cases.
— Yun Li
