As November concludes with its third consecutive winning week, Wall Street is experiencing a subdued trading session on Friday. In early trading, the S&P 500 is marginally down by 0.1%, hovering near its highest level in three months. The Dow Jones Industrial Average has dipped by 39 points, or 0.1%, as of 9:40 a.m. Eastern time, while the Nasdaq composite is down by 0.2%.
Several retailers are making notable gains after reporting better-than-expected results for the latest quarter. Gap has surged by 24.4%, surpassing Wall Street’s profit forecast and doubling its year-to-date gain. Ross Stores also climbed by 6% after reporting stronger-than-expected profit and revenue.
Conversely, BJ’s Wholesale Club is down by 2.8% despite reporting better-than-expected results. Analysts attribute this to an underlying sales figure, excluding the boost from store openings, falling short of expectations.
The earnings reporting season for the summer has exceeded expectations, with companies in the S&P 500 on track to report their first overall growth in a year, according to FactSet.
This week, the predominant factor driving stocks higher is the hope that inflation has cooled sufficiently for the Federal Reserve to conclude its interest rate hikes. The Fed, having raised its main interest rate to the highest level since 2001, aims to control inflation without causing a recession. Tuesday’s report showing a greater-than-expected cooling of inflation at the consumer level fueled optimism. Traders are now speculating on when the Fed might begin cutting interest rates, potentially starting in the summer of 2024.
One concern about inflation, oil prices, has eased in recent weeks. While U.S. crude rose 1.9% on Friday to $74.47, recovering from earlier losses, it remains below its late September peak above $93. Brent crude, the international standard, also rose 1.9% to $78.87 per barrel.
In the bond market, the yield on the 10-year Treasury is holding steady at 4.44%, having dropped from above 5% a few weeks ago, which had impacted stock and investment prices.
In international markets, Hong Kong’s Hang Seng fell by 2.1%, with Chinese e-commerce giant Alibaba’s shares plunging following the cancellation of its cloud computing unit spinoff, citing uncertainties due to U.S. chip restrictions. Stock indexes in Asia were mixed, while European markets showed more solid gains.
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