Daily Stock Market Reports

Stock Market Today: Dow Slips, Oil Steadies, Gap and Nordstrom Plunge


Stocks closed mostly higher Wednesday after investors decided to buy the dip before taking a break for Thanksgiving.

The uptick came from economic data forcing the market to reflect higher expectations that the Federal Reserve will reduce support from both the market and the economy.

Buying the dip played a role in the Nasdaq’s late rebound. “People now know to buy the dips,” said John Ham, wealth advisor at New England Investments & Retirement Group. 

Retail traders—those who use popular trading platforms like Robinhood and TD Ameritrade—have been active stock buyers. Retail traders have been trained to buy dips in the market in the postpandemic period, which hasn’t yet seen one of the major indexes experience a technical correction, defined as a 10% drop.

The dip buying comes after the Nasdaq had fallen from Friday’s close. At its low point, it was down almost 3% from Friday. During the same time, the 10-year Treasury yield jumped. That increase weighs the most on expensive tech stocks because many tech companies are expecting a large share of their profits to come many years down the line — and higher bond yields make future profits less valuable. 

And until tech stocks began to rise Wednesday, the tone of the market was more sour. A large batch of economic data had made traders antsy that the Fed will be more hasty in reducing the size of its bond-buying program and in raising short-term interest rates.

“Today’s rationale is that the jobless claims came in at the lowest number in 50 years, fueling concerns that this might stiffen the Fed’s backbone regarding accelerating the tapering and moving up the timetable for rate increases next year,” wrote Louis Navellier, founder of Navellier & Associates. 

Jobless claims fell to 199,000, the lowest level for initial claims since Nov. 15, 1969, according to the Labor Department, and far better than the expected 260,000. The drop extends a trend of strength in the labor market.

After the jobless claims result, the rates market began reflecting higher chances that the Fed will speed up the pace of tightening monetary policy. The 2-year Treasury yield rose to 0.64% from 0.61% before the data was released.

The 10-year Treasury yield rose to as high as 1.69% from1.66% before the data. Its pop signified that traders see the Fed potentially reducing the size of its bond program faster, which would drag down bond prices, lifting their yields. The yield settled at 1.64%.

Indeed, the Fed’s minutes confirmed that the high inflation could prompt the central bank to reduce its bond buying at a faster pace.

“Various participants noted that the Committee should be prepared to adjust the pace of asset purchases and raise the target range for the federal-funds rate sooner than participants currently anticipated if inflation continued to run higher than levels consistent with the Committee’s objectives,” the minutes read.

One key impact that higher rates across the board have on the stock market is that household and business borrowing becomes harder, potentially slowing economic growth.

Positively, inflation met estimates Wednesday, after having beaten expectations weeks ago. That may have also played a part in helping the stock market reverse some if its losses.

The Core Personal Consumption Expenditures Index, a key inflation measure the Fed tracks, rose 4.1% year-over-year in October, in line with estimates and higher than the previous reading of 3.7%. 

“Maybe that [inflation result] validates the thesis that it’s [inflation] transitory,” said Kevin Simpson, founder of Capital Wealth Planning. 

Personal spending also rose 1.3% month-over-month in October, higher than the expected 1% rise. Inflation, for the moment, isn’t dissuading consumers from spending as households still have a stockpile of cash partly resulting from economic stimulus. “Consumers are flush with cash and excited to spend,” Simpson said.

Elsewhere, durable goods orders fell 0.5% month-over-month in October, worse than the consensus economist forecast of a 0.3% rise. It’s widely expected that consumers will shift from buying more services and fewer goods, which were in favor when households stocked up during the pandemic.

Here are five stocks on the move:



Gap

(ticker: GPS) plunged more than 24% after the clothing retailer failed to meet expectations for quarterly results and slashed its full-year outlook.

Another clothing retailer,



Nordstrom

(JWN), was down 29% after its results also failed to impress, and it outlined higher labor costs and supply-chain issues.



Autodesk

(ADSK) was down 15%. The software group’s sales and earnings met expectations, but its outlook disappointed the market.



Pure Storage

(PSTG) stock gained 13% after the company reported a profit of 22 cents a share, beating estimates of 12 cents a share, on sales of $563 million, above expectations for $531 million. 



Anaplan

(PLAN) stock dropped 15% after the company reported a loss of 9 cents a share, narrower than the analyst estimate of a 14 cents loss, on sales of $144.3 million, above expectations for $133.8 million. 

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com



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