Dow climbs to fresh nearly 2-year high as investors await Fed’s Powell

U.S. stocks opened mostly lower on Friday after capping off a spectacular November for markets, while the Dow saw modest gains that pushed the blue-chip average to a fresh nearly two-year high.

Now, investors are waiting to hear from Federal Reserve Chairman Jerome Powell, who is set to speak at an event in Atlanta.

What’s happening

  • The Dow Jones Industrial Average
    was up 10 points, or less than 0.1%, to 35,954.

  • The S&P 500
    fell by 5 points, or 0.1%, to 4,562.

  • The Nasdaq Composite
    fell by 41 points, or 0.3.%, to 14,186.

On Thursday, the Dow Jones Industrial Average rose 520 points, or 1.47%, to 35,951 — its highest close in 22 months — while all three major indexes capped off substantial gains for the month of November. The S&P 500 gained 8.9% while the Nasdaq gained 10.7%, the biggest monthly advance for both indexes since July 2022, Dow Jones data show.

What’s driving markets

November was a fantastic month for markets. U.S. stocks saw a broad rally that saw 10 of the S&P 500’s 11 sectors finish in the green, with the energy sector being the lone holdout thanks to the drop in crude-oil prices.

Bonds also rallied, with the yield on the 10-year Treasury note falling 70 basis points
the steepest monthly decline since the 2008 global financial crisis, according to Goldman Sachs. The benchmark bond yield stood at 4.342% early Friday, according to FactSet data.

But the rally appeared to take a breather early Friday, as stocks moved mostly lower ahead of comments from Powell, which are due at 11 a.m. Eastern Time.

Expectations for the Fed’s interest-rate cuts to begin as soon as May, or maybe even March, helped send bond yields, which move inversely to prices, lower in November, while pushing stocks higher.

“Bond yields in the U.S. and Europe have tumbled during November as inflation falls and policy rates peak. This has proved a welcome respite for global equity markets, which were under pressure from rising bond yields over the summer,” said Alastair George, chief investment strategist at Edison Investment Research.

Earlier in the week, Fed Gov. Christopher Waller seemed to put a rate cut in the cards potentially as early as the spring. Investors are now waiting to see if Powell will confirm that the Fed’s thinking is indeed evolving in this direction ahead of the central bank’s upcoming December policy meeting, said Fundstrat’s Tom Lee.

“In my opinion, the evidence seems to point to an easing of inflation faster than expected. And thus, gives them room to walk back their ‘higher for longer’ hawkish tone seen for much of 2023 and the resulting efforts to dampen expectations for moving away from ‘higher for longer’,” Lee said in emailed commentary.

See: Powell won’t endorse market expectations for quick rate cuts

Before the Powell speech, the key Institute for Supply Management’s manufacturing report is due, as automakers release their monthly sales statistics throughout the day.

There also were several after-hours earnings from the tech space, including from Dell Technologies
Marvell Technology
and UiPath

Companies in focus

  • Tesla Inc.

    shares sank following Thursday’s Cybertruck delivery event.

  • Shares of Fisker Inc.

    bounced Friday after the electric-vehicle maker said it decided to cut December production to free up more than $300 million of liquidity.

  • Ulta Beauty Inc.’s stock soared after the beauty company beat third-quarter consensus estimates from its latest earnings report.

  • Pfizer Inc.

    stock tumbled after the company said it would not move to a Phase 3 trial of a twice-daily formulation of a weight-loss drug after patients in an earlier study had a lot of side effects.

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