Stocks continued their run higher on Tuesday, extending gains for the seventh straight session as renewed confidence in the Federal Reserve’s completion of its tightening campaign this year buoyed investors.
The tech-heavy Nasdaq Composite (^IXIC) rose 0.9%, extending its winning streak, while the benchmark S&P 500 (^GSPC) gained nearly 0.3%. The Dow Jones Industrial Average (^DJI) rose nearly 0.2%, or nearly 60 points.
Recent signs of a weaker US economy signaled to the market that the Fed could ease its rate hikes. But central bankers have said the door is still open to further increases even if officials decide to hold off for a while.
And while the market’s momentum has shifted to a more optimistic reading, there are plenty of cautious voices among investors curbing their exuberance, including Minneapolis Fed President Neel Kashkari, who stressed both Monday and Tuesday that the central bank probably has more work to do to control inflation. Kashkari was one of several more hawkish Fed members to express caution on Tuesday. Meanwhile, Chairman Jerome Powell will speak later in the week.
Read more: What the Fed’s pause on rate hikes means for bank accounts, CDs, loans and credit cards
“There was quite a bit of euphoria at the end of last week in the belief that the Fed is dead, the labor market is slowing and the U.S. economy will see a soft landing,” Michael Hewson, chief market analyst at CMC Markets UK, told Portal. “People have become a little clearer. There is a risk that the Fed could hike again.”
The Fed’s fresh doubts clouded oil’s outlook and helped push WTI crude prices below $80 a barrel for the first time in over two months, despite the prospect of supply cuts in Saudi Arabia and Russia. West Texas Intermediate crude oil futures (CL=F) and Brent crude oil futures (BZ=F) each fell 4% to $77.48 and $81.76 a barrel, respectively.
Also weighing on oil prices were trade data that showed China’s export decline unexpectedly accelerated in October, a sign that foreign demand weakened while imports rose. But there was a bright spot for the world’s second-largest economy as the IMF raised its GDP growth forecasts for the country this year and next.
In corporate news, WeWork (WE) filed for bankruptcy on Monday after what was once the most valuable U.S. startup struggled with expensive leases. Its shares are down about 98% this year.
Meanwhile, earnings season continues with reports from Uber (UBER) and Rivian (RIVN) highlighting Tuesday’s agenda, ahead of Disney’s (DIS) closely watched results due on Wednesday.
Stocks post seventh straight win
The benchmark S&P 500 (^GSPC) rose for a seventh straight session, extending its winning streak, as investors trusted the Federal Reserve would keep interest rates steady through the end of the year. The S&P rose almost 0.3%
The tech-heavy Nasdaq Composite (^IXIC) rose 0.9% for its eighth straight day of gains, while the Dow Jones Industrial Average (^DJI) gained 0.17%, or nearly 60 points.
A$30 for ESPN streaming service ‘totally reasonable’: Fmr. Disney manager
Wall Street has been skeptical about how much Disney (DIS) can charge for the new ESPN streaming service it plans to launch. But the company’s former streaming chief says sports fans will be willing to pay – even if the price is higher than what most platforms currently cost.
“People have always paid a lot for sports,” Kevin Mayer, who now runs Blackstone-backed entertainment startup Candle Media, said at the Yahoo Finance Invest Conference on Tuesday. “They didn’t always know it because back when 95% of this country had pay TV packages, probably 40 to 50% of the cost of that package was sports programming. … [But] Now you can do this explicitly.
His comments come as Disney shares are at their lowest point in several years and activist investor Nelson Peltz is pushing for multiple seats on the company’s board. The company’s parking business is slowing, its linear TV division is declining and its streaming business is not yet profitable.
Mayer, who currently serves as a strategic adviser to CEO Bob Iger, said his former boss is “definitely focused first and foremost on making sure that ESPN, a company that he really believes in, is well-positioned for the future.”
Disney hasn’t disclosed pricing details for the ESPN service, although analysts have estimated it would have to cost at least about $30 a month to break even – let alone turn a profit.
However, Mayer insisted that $30 a month was a “totally reasonable price to take advantage of all of ESPN’s sports offerings.”
Read more here.
Fed Chairman Goolsbee says the “golden path” of a soft landing is still possible
A significant drop in inflation that doesn’t trigger a recession is still possible, Chicago Fed President Austan Goolsbee said.
“In the next few months we could see the fastest decline in inflation in the last century,” Goolsbee said in an interview with CNBC on Tuesday. “So we are making progress on the inflation rate.”
Goolsbee noted that in previous battles against inflation, when central bankers had to sharply reduce price pressures, a recession usually followed. But a soft landing in this tightening cycle would do something that hasn’t been possible so far because of the magnitude of the drop in inflation required, he said.
He also noted that if the Fed makes further progress on the inflation front, the debate will shift from whether to raise rates to how long to keep rates elevated.
According to a study by the New York Fed, credit card debt and defaults rose sharply
Credit card balances rose $48 billion in the third quarter to a record $1.08 trillion, according to data released Tuesday by the Federal Reserve Bank of New York. The $154 billion year-over-year increase in debt was the largest such increase since the data series began in 1999. At the same time, the 90-day credit rate for credit card holders rose to 5.78% from 3.69% a year earlier, Gabriella reports Cruz Martinez from Yahoo Finance.
The data showed rising delinquencies cut across incomes and geographies, but were particularly acute among millennials and those with car or student loans.
The new data comes as the three-year payment pause on federal student loans ended in October and interest rates on credit cards have risen to their highest level in 38 years. For some borrowers suffering from credit card debt, the combination was a blow.
Stock trends in afternoon trading
Here are some of the stocks topping Yahoo Finance’s Trend Ticker page in afternoon trading on Tuesday:
Intel (INTC): Shares of the multinational technology company rose 2% on Tuesday afternoon after a Wall Street Journal report revealed that the company may receive billions of dollars in government funding for secure facilities to produce microchips for U.S. military and intelligence applications.
ARM (ARM): Arm shares rose more than 3% after reports that both Nvidia (NVDA) and AMD (AMD) plan to launch Arm-based central processing units (CPUs) for Windows-based PCs.
Datadog (DDOG): Shares rose nearly 30% on Tuesday afternoon after the security software company beat earnings expectations and delivered a positive outlook as more customers move to the cloud and seek more robust security solutions amid increasing cybersecurity threats.
Planet Fitness: (PLNT): Shares of the gym chain rose more than 12% on Tuesday after it reported a nearly 14% year-over-year increase in total sales due to a rise in same-store sales and more than two dozen new clubs.
Shares are rising in afternoon trading, on track for a seven-day winning streak
The benchmark S&P 500 (^GSPC) is on track to post its seventh straight day of gains if it holds on to gains until the closing bell. The index rose 0.2% in afternoon trading.
The tech-heavy Nasdaq Composite (^IXIC) rose about 0.7%, reaching its eighth straight day of gains, while the Dow Jones Industrial Average (^DJI) was just above flat.
Hopes for an end to interest rate hikes are causing corporate profits to shine
Strong results from American companies are generally causing stocks to rise again.
According to Bespoke Investment Group, the 710 companies that reported quarterly results last week saw a 2.3% gain in the trading session following their release. That’s one of the best metrics in the last 20 years, reports Yahoo Finance’s Josh Schafer.
But it’s not the earnings themselves that have changed investor behavior, but rather the changing perspective that is raising new hopes on Wall Street that the Fed is close to ending its campaign of interest rate hikes.
As the current market consensus has shifted in recent trading sessions, investors appear to be less worried about the headwinds that drove stock prices lower in October. Late Tuesday morning, markets were counting on a 90% chance that the Fed will keep interest rates steady in December, well above the roughly 58% chance a month ago.
Marriott’s CEO is committed to the Middle East market and bullish on China
Marriott Chief Executive Anthony Capuano said the hotel chain is committed to the Middle East market even as the conflict in Israel and Gaza poses the potential for broader regional instability. “We have a solid pipeline across the region,” Capuano said during a live interview on Yahoo Finance Invest, adding that retaining guests in the hotel ecosystem is a top priority. Marriott has more than two dozen hotels in Lebanon and Egypt.
Capuano also highlighted the company’s growth in China, its second-largest market. The operating environment there, he said, “has more than fully recovered to pre-pandemic levels.” Marriott recently opened its 500th hotel in China, he said, and plans to open another 400 properties.
As the U.S. and China grapple with heightened economic and national security tensions, Capuano said his company has been able to stay out of the geopolitical conflict because Marriott is an asset-light company.
Of the 500 hotels in Marriott’s China portfolio and the hundreds more soon to follow, most properties are “almost entirely Chinese-owned,” he said.
Stock trends in morning trading
Here are some of the stocks topping Yahoo Finance’s Trend Ticker page in morning trading on Tuesday:
Datadog (DDOG): Shares rose 24% on Tuesday morning after the security software company beat earnings expectations and delivered a positive outlook as more customers move to the cloud in search of more robust security solutions amid increasing cybersecurity threats.
Planet Fitness: (PLNT): Shares of the gym chain rose more than 15% on Tuesday after it reported a nearly 14% year-over-year increase in total sales due to gains in same-store sales and more than two dozen new clubs.
WeWork (WORK): Trading with the co-working space provider remains halted as the former successful start-up looks set to file for bankruptcy after its $50 billion valuation plummeted. The company warned investors in August that its financial difficulties could force it to close, underscoring its disastrous record as a publicly traded company. The last price was under $1.
Peloton (PTON): The troubled connected fitness company rose less than 1% on Tuesday morning after investors sent the company down more than 5% in premarket trading. The rollercoaster ride came after Deutsche Bank downgraded Peloton to “Hold” from “Buy” as it sought clarity on its growth prospects.
Stocks open mixed as momentum fades
Wall Street failed to sustain the momentum that fueled last week’s rally as pessimism about the possibility of future interest rate hikes overtook hopes of an end to the Fed’s tightening campaign.
The tech-heavy Nasdaq Composite (^IXIC) rose about 0.3%, continuing its winning streak, while the benchmark S&P 500 (^GSPC) fell slightly by 0.06%. The Dow Jones Industrial Average (^DJI) fell 0.1%, or about 30 points.
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