Wall Street Extends Winning Streak Despite Tariff Concerns
Wall Street continued its upward momentum, with major indices achieving record highs for the seventh consecutive session. This rally was fueled by hopes for a Federal Reserve rate cut and a rebound in mega-cap stocks like Apple, Microsoft, and Meta Platforms. The Nasdaq Composite led the gains, while the S&P 500 surpassed the 6,000 mark for the first time in nearly two weeks.
Inflation concerns were subdued ahead of today’s key Personal Consumption Expenditure (PCE) price index. Dovish signals from Federal Reserve minutes eased shorter-term bond yields, although the 10-year Treasury yield edged higher.
Market Dynamics Highlighted
The session showcased mixed market dynamics. Gains in mega-cap stocks masked broader market softness, with two-thirds of NYSE-listed equities declining. Trade-sensitive sectors, such as materials and energy, faced headwinds from President-elect Trump’s proposed tariff hikes targeting Canada, Mexico, and China. Legal complications under the US-Mexico-Canada Agreement (USMCA) may, however, delay or hinder these measures. Defensive sectors like utilities and technology outperformed, benefiting from their appeal during uncertain times.
Global Markets: Mixed Reactions to Trade Developments
European Markets
The Euro Stoxx 50 index fell 0.8% to 4,762, driven by escalating trade concerns after President-elect Trump’s renewed tariff threats. Losses were led by Stellantis, down nearly 5%, reflecting its reliance on Mexican manufacturing. Other laggards included BBVA, ENI, and Anheuser-Busch.
Asian Markets
Asian equities had a broadly subdued session. Japan’s Nikkei declined 0.9%, dragged down by auto shares and a stronger yen. Chinese blue chips and Taiwanese stocks also posted losses, while South Korea’s KOSPI and Hong Kong’s Hang Seng registered modest gains, highlighting mixed performance across the region.
Latest Market Update
U.S. Equity Futures
U.S. equity futures remained steady ahead of Wednesday’s opening bell, with investors awaiting the PCE price index, a critical inflation gauge expected to shape Federal Reserve interest rate decisions. Technology shares demonstrated resilience amid lingering tariff concerns. Trading volumes are anticipated to ease later in the week due to the Thanksgiving holiday.
Sector Highlights
Oil Prices
Oil prices edged lower following a ceasefire between Israel and Hezbollah, which reduced concerns over Middle Eastern supply disruptions. Losses were partially offset by data showing a substantial draw in U.S. oil inventories and speculation that OPEC+ may delay planned production increases during its upcoming meeting.
Currency Movements
The U.S. dollar held steady against major currencies, with little change against the euro, which hovered near $1.0493. While the dollar has seen turbulence linked to President-elect Trump’s tariff announcements and his Treasury secretary nomination, recent fluctuations have stabilized.
Equities on the Move
Declining Performers
- Dell Technologies: Shares fell over 11% in after-hours trading after the company forecast weaker-than-expected fourth-quarter revenue. This was attributed to soft PC demand and cautious enterprise IT spending, despite strong AI server sales. Third-quarter revenue also missed expectations.
- HP Inc.: Shares dropped 7.5% after the company projected first-quarter profits below Wall Street estimates, citing continued weakness in PC demand and increased competition. Fourth-quarter revenue rose 1.7%, but the company faces ongoing margin pressures.
Mixed Market Reactions
- CrowdStrike Holdings: The cybersecurity firm exceeded third-quarter earnings expectations, reporting a 29% revenue increase to $1.01 billion and a profit per share of 93 cents. The company achieved a milestone of over $4 billion in annual recurring revenue, driven by increased investments in cybersecurity amid growing online threats. Despite these positives, shares fell 5.8% in after-hours trading.
- Abercrombie & Fitch: Reported better-than-expected third-quarter results, with earnings per share of $2.50 and revenue of $1.2 billion, driven by strong sales growth in both Abercrombie and Hollister brands. Despite raising its full-year outlook, shares fell 5.1% during regular trading.
Notable Analyst Ratings
- Royal Caribbean: Bernstein rated Royal Caribbean “Outperform,” citing its strong recovery and financial performance. The firm projected a 23% upside driven by investments in larger ships and private destinations. In contrast, Carnival received a “Market-Perform” rating due to slower recovery and weaker returns.
- Amgen: Shares fell over 4% despite promising Phase 2 study results for an experimental weight-loss drug. Participants on the highest dose lost an average of 20% of their body weight over a year. However, the drug’s results were not superior to Eli Lilly’s weight-loss blockbuster Zepbound, which rose 4.5%.
- Banco BPM: The Italian bank rejected UniCredit’s €10 billion takeover bid, citing undervaluation, strategic limitations, and risks tied to UniCredit’s German expansion plans. The minimal 0.5% premium also constrained BPM’s acquisition of Anima Holding and raised concerns over broader consolidation strategies in Italy.
- HSBC Downgrades: Both Goldman Sachs and Morgan Stanley were downgraded to “hold” from “buy” by HSBC, citing limited upside after recent equity rallies. Despite raising price targets and earnings estimates, HSBC flagged less attractive risk-reward profiles.
- Chevron: Citi upgraded Chevron to “buy” from “neutral,” highlighting a valuation gap with Exxon and growth potential from exploration in Namibia and the upcoming resolution of the Hess arbitration. Chevron’s price target was raised to $185, citing attractive long-term investment opportunities.
Upcoming Data and Events
Key data releases today include:
- PCE Price Index: A crucial inflation metric likely to shape Federal Reserve expectations.
- Personal Income and Spending Reports: Offering insights into consumer trends.
- Third-Quarter GDP Estimate: Providing an updated view of economic growth.
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