Stocks were mixed on Thursday as investors weighed a batch of solid corporate earnings results against lingering inflation concerns.
The S&P 500 and Nasdaq ended a choppy session higher. The Dow lagged, led by a drop in shares of Cisco (CSCO). The company posted quarterly results that were dented by components shortages, and the computer networking equipment company posted a disappointing current-quarter forecast. And meanwhile, Alibaba’s (BABA) sharply disappointing quarterly report and slashed guidance for the full year raised alarm bells about the pace of growth in China — the world’s second-largest economy — as company executives highlighted slowing consumption trends
Nvidia (NVDA) shares jumped, however, after the semiconductor company posted record quarterly revenues and strong full-year guidance. The report suggested it was effectively navigating a lingering global shortage and meeting elevated demand.
The past couple days of equity market volatility have coincided with a mixed set of economic data, with a new print Thursday showing jobless claims ticked down only modestly last week, and a report Wednesday showing a surprise drop in new-home construction last month. Commentary about inflation also mounted and added to investors’ concerns over elevated price pressures. Target (TGT) executives flagged rising labor and other input costs during their earnings call on Wednesday and added to a chorus of other company mentions of inflation.
The possibility that elevated inflation will stick around longer than previously anticipated remained a central focus for investors, both for its potential dampening effect on consumer spending, and as a potential catalyst for the Federal Reserve to raise interest rates sooner than previously telegraphed. The U.S. central bank has so far maintained its accommodative tilt and telegraphed that an initial interest rate hike could take place sometime next year, depending on the evolution of the economic recovery. Investors also continue to await a formal announcement from President Joe Biden about his nominee for Fed chair, with the most likely candidates being current Fed Chair Jerome Powell, and current Fed Governor Lael Brainard.
The Fed’s present still-accommodative leaning has helped support equity markets and capped Treasury yields, which has in turn further kept investors focused on riskier assets like stocks over bonds.
“The yield question is kind of global in nature,” Uma Pattarkine, CenterSquare senior analyst, told Yahoo Finance Live on Wednesday. “We still see [central] banks being very, very accommodative. So it seems like we might be kind of in this ‘lower rate for a longer time’ environment.
“At this point investors really need to be looking at yields, where they can get it elsewhere in the market if they’re not planning on getting it through fixed income in the near future, until we see that movement in the global rate market,” Pattarkine added.
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4:13 p.m. ET: Nasdaq and S&P 500 end higher as Amazon, Apple gain; Dow closes slightly lower
Here were the main moves in markets as of 4:13 p.m. ET:
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S&P 500 (^GSPC): +15.87 (+0.34{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,704.54
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Dow (^DJI): -60.10 (-0.17{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 35,870.95
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Nasdaq (^IXIC): +72.14 (+0.45{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,993.71
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Crude (CL=F): +$0.35 (+0.45{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $78.71 a barrel
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Gold (GC=F): -$7.80 (-0.42{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,862.40 per ounce
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10-year Treasury (^TNX): -1.5 bps to yield 1.5890{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}
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1:32 p.m. ET: ‘It’s not just an inflation story, it’s a growth story’: UBS
Investors should take into consideration both rising inflation and improving economic growth in the current macro environment when contemplating investments, Jason Draho, UBS head of asset allocation Americas, noted to Yahoo Finance Live on Thursday.
“The environment right now that’s leading to inflation is also tied to a very strong economic recovery in the U.S., but even increasingly globally. Part of that story means, it’s not just an inflation story, it’s a growth story,” Draho said. “So things that you can do in your portfolio and ways to take advantage of it and sort of get the benefit of both aspects, which means buying things tied to what’s in demand … things like commodities, financials, things of that sort. So part of this is a hedge for inflation but part of it is also a play for a longer-term recovery.”
Draho also added that some of the factors contributing to present levels of inflation — namely, supply-side disruptions — may soon dissipate.
“I’d say we’re at the peak or even probably past the peak,” of supply chain bottlenecks, he added. “It’s still going to probably take at least a few quarters for things to really sort of be running fully efficiently.”
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12:30 p.m. ET: Microsoft shares set record intraday high, Amazon’s stock jumps to reach highest since July
Big Tech stocks outperformed on Thursday to help pull the S&P 500 and Nasdaq higher, and both shares of Microsoft and Amazon set new milestones.
Microsoft (MSFT) shares rose to a record intraday high, sending the stock’s market capitalization further above $2.5 trillion. Amazon (AMZN) shares, meanwhile, jumped to their highest level since July, helping unwind a multi-month drift that still left the stock underperforming against the S&P 500 for the year-to-date.
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10:11 a.m. ET: Macy’s shares jump more than 18{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} after topping 3Q results, raising guidance
Macy’s (M) became the latest retailer to exceed quarterly estimates this week, suggesting U.S. consumer spending was staying solid and foot traffic to department stores was rebounding more quickly than expected.
Macy’s owned plus licensed comparable same-store sales jumped by 35.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, exceeding the 33.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} growth rate expected, based on Bloomberg consensus data. The company also swung back to a profit, with adjusted earnings coming in at $1.23 per share, following a loss of 19 cents a share in the same quarter last year. Gross margins expanded by about 100 basis points, “driven by stronger regular price selling, fewer markdowns” that offset rising delivery costs, CEO Jeff Gennette said during the company’s earnings call.
“On the health of the customer, we definitely see that continuing,” Gennette added.
For the full year, Macy’s sees adjusted earnings coming in between $4.57 to $4.76 per share, marking a significant increase from its prior outlook for $3.41 to $3.75 a share.
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9:50 a.m. ET: Alibaba shares slide after missing earnings estimates, slashing guidance
Alibaba posted September quarter results and guidance that sharply missed estimates, with a slowing economic environment in China and efforts to contain the coronavirus in the region weighing on consumer spending on the e-commerce platform.
“Over the last 6 months, we have observed softer market conditions with slowing consumption growth in China,” Alibaba Chief Financial Officer Wei Wu said during the company’s earnings call Thursday. “Given slower-than-expected domestic consumption growth, since we provided our revenue guidance in May, we now expect our fiscal ’22 revenue growth to be 20-23{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} year-over-year.”
Consensus analysts were expecting full-year sales growth of 27{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, based on Bloomberg data.
For Alibaba’s latest reported quarter, sales grew by a smaller-than-expected 29{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to reach 200.7 billion yuan ($31.4 billion), whereas analysts were looking for 206.2 billion yuan. Adjusted earnings per American depository share were 11.20 yuan, also short of the 12.37 expected. The weakness was mostly contained to Alibaba’s core retail business, with its newer cloud computing business posting a 33{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} rise in revenue during the quarter.
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9:30 a.m. ET: Stocks mixed, tech leads Nasdaq higher
Here’s where markets were trading shortly after market open on Thursday:
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S&P 500 (^GSPC): +8.82 (+0.19{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,697.49
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Dow (^DJI): -20.03 (-0.06{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 35,913.81
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Nasdaq (^IXIC): +24.55 (+0.15{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,941.73
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Crude (CL=F): +$0.45 (+0.57{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $78.81 a barrel
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Gold (GC=F): -$5.60 (-0.3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,864.60 per ounce
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10-year Treasury (^TNX): unchanged to yield 1.6040{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}
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8:35 a.m. ET: Initial unemployment claims come in slightly higher-than-expected, but still reach fresh pandemic-era low
First-time unemployment claims narrowly set a new pandemic-era low last week, representing further steady progress in the labor market’s recovery as the number of those newly unemployed marched closer to pre-pandemic levels.
New unemployment claims came in at 268,000 during the week ended Nov. 13. This was down by a tick compared to the upwardly revised 269,000 reported for the previous week. Consensus economists were looking for new claims to come in at 260,000 for the latest period, according to Bloomberg data.
Continuing claims across regular state programs also came in at their lowest level since March 2020 at 2.080 million for the week ended Nov. 6. This was a bigger improvement than expected, since economists were looking for continuing claims to total 2.120 million.
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7:32 a.m. ET Thursday: Stock futures advance
Here’s where markets were trading Thursday morning:
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S&P 500 futures (ES=F): +11.75 points (+0.25{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 4,696.00
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Dow futures (YM=F): +34 points (+0.09{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 35,901.00
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Nasdaq futures (NQ=F): +84.25 points (+0.52{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 16,395.75
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Crude (CL=F): -$0.67 (-0.84{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $77.69 a barrel
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Gold (GC=F): -$4.20 (-0.22{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,866.00 per ounce
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10-year Treasury (^TNX): -0.5 bps to yield 1.599{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}
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6:17 p.m. ET Wednesday: Stock futures open mixed
Here’s where markets were trading Wednesday evening:
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S&P 500 futures (ES=F): +0.5 points (+0.01{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 4,686.75
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Dow futures (YM=F): -34 points (-0.09{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 35,833.00
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Nasdaq futures (NQ=F): +18 points (+0.11{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 16,329.5
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter
