November 15, 2024

The market did poorly yesterday, which continues the recent pattern of equities showing some resistance after their recent tremendous move higher, especially after the recent election.

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The Dow fell by 207 to 43,799 led by selling in AMGN, CRM coming off its all-time highs, GS, HD, IBM which is also starting to slip, and UNH which is in its own upside-down world of large moves in both directions one after the other.

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The S&P fell by the largest amount in a couple of weeks after reaching its all-time high on Monday over 6000, with a 36 point wallop as it constantly fails at the intraday 6110 level for a few days recently. It was hurt by financials, industrials and defense stocks, in addition to most large tech issues, but the three largest weightings actually had the nerve to go higher – AAPL, which basically does nothing over time but does get strong on certain days after being lower for a few, MSFT which overcame another potential antitrust threat, NFLX which has developed its own recent upside world and NVDA which struggled to stay positive at the end of the day after a nice start. And this one does report its latest earnings this coming Wednesday afternoon and will be closely watched.

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The Nasdaq was hurt by losses in most large tech stocks with the exception of those mentioned above and TSLA got whacked lower once again after failing at 358 this week when all of the experts” on this one jumped on board with very high price targets as high as 400, and when is this going to happen.

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The Russell 2000 which became a recent darling also got taken down badly with a 32 point decline down to 2337 on weakness in financials.

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And how about the VIX, which for some strange reason and at historically low levels, barely struggled to get a little higher at the end of the session at 14.31.

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Another Trump favorite, namely his DJT, continued to decline and ended lower at 26.99. This is after the company’s most recent financial statement showed very little positive inputs.

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Dow component CSCO, which is a waste of a position in that it does nothing, weighed on the market, even though the tech giant reported stronger profit for the latest quarter than analysts expected. Investors may have been looking for it to raise its financial forecasts more, analysts suggested.

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The stock market broadly has been rising faster than corporate profits, which raises the volume on criticism from skeptics that it has gotten too expensive. The S&P is still up nearly 25% for the year so far, on top of last year’s leap of 24.2%.

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Smaller stocks also fell harder than the rest of the market, and the Russell 2000 index of small stocks lost 1.4%. It is a turnaround from the election’s immediate aftermath, when the thought was that an “America First” president would benefit domestically focused companies more than big multinationals that could be hurt by tariffs and trade wars.

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Even though Republicans now control the White House, Senate and House of Representatives, which could give them more leeway to push through their policies, promises made on the campaign trail may not be implemented immediately, with final legislation likely to be a pared-down version of the original proposals.

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Stocks also felt the effects of swinging yields in the bond market following the latest hotter than expected economic reports and comments from Federal Reserve Chair Jerome Powell. The Fed just cut its main interest rate earlier this month for the second time this year to ease the pressure on the economy, and investors are eager for more.

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But short-term yields climbed after Powell said, “The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.” And these remarks were typical of negative market reactions many times when he makes various observations.

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The two-year Treasury yield, which closely tracks expectations for Fed action, rose to 4.35% from 4.28% late Wednesday.

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Earlier in the day, it had wavered after a report showed prices paid at the U.S. wholesale level were 2.4% higher in October from a year earlier. That was an acceleration from September’s 1.9% wholesale inflation rate and a worse jump than economists expected.

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A separate report, meanwhile, suggested the job market remains solid, as weekly unemployment claims slipped to 217,000 in the latest signal that layoffs aren’t taking off.

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The yield on the 10-year Treasury also swiveled up and down before sitting at 4.45%, where it was late Wednesday.

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SMCI tumbled 11% for one of the worst losses in the S&P after telling U.S. regulators it needs more time to file its financial statements for the latest quarter, which ended in September.

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The server maker’s stock had been one of the biggest winners of the artificial-intelligence boom, but it has struggled recently, particularly after Ernst & Young resigned as its public accounting firm. A special committee of the company’s board has since said that a three-month investigation found “no evidence of fraud or misconduct on the part of management or the Board of Directors.”

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Helping to keep the losses in check was Dow component DIS which rose by 6% after the entertainment giant reported stronger profit for the latest quarter than analysts expected. CEO Robert Iger credited improved profits at its streaming businesses and strong box-office results for its movies, including “Inside Out 2” and “Deadpool & Wolverine,” among other things.

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TPR shares climbed 12% after the luxury fashion company said it is ending its merger with CPRI, another luxury brand owner. The companies agreed to an $8.5 billion deal last year to unite the makers of Coach and Michael Kors handbags, but the tie-up faced numerous challenges, including a lawsuit from the Federal Trade Commission to block the deal on antitrust grounds. The latter gained as well.

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ASML, a major supplier to the global chip industry, also gave some encouraging signals for technology stocks. The Dutch company said it expects global semiconductor sales to top $1 trillion by 2030, with the help of demand related to artificial-intelligence technology, and it stood by its long-term financial forecasts. ASML shares that trade in the United States rose by 3%.

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In stock markets abroad, European indexes rose, including a 1.4% jump for Germany’s DAX. Asian markets were mixed, meanwhile. Hong Kong’s Hang Seng dropped 2%, but South Korea’s Kospi added 0.1%.

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Third-quarter earnings season is starting to wind down and the lineup for this week includes: yesterday - Dow component CSCO lower and DIS higher in addition to BZH, while AAP, JJSF were down; today AMAT lower and BABA higher.

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Economic reports will see: yesterday - October C.P.I. came in as expected with a 0.2% gain and 0.3% excluding food and energy. Year over year the advance was 2.6% and 3.3% excluding food and energy; today - October P.P.I. rose by 0.2% and ex-food and energy was higher by 0.3%. Year over year they rose by 2.4% and 3.1% respectively and weekly jobless claims eased back to 217,000; Friday – October retail sales rose by 0.4% and ex-autos was up by 0.1% and NY State Empire Manufacturing Survey gained 31.2, October import prices gained 0.3% and 0.8% year over year, export prices gained 0.8% for the month but negative 0.1% yearly, October industrial production and capacity utilization later today.