Today's trading session was characterized by a lack of strong directional movement in major indices, as both buyers and sellers showed little conviction. However, interest in mega-cap stocks and relief from the November employment report helped maintain a relatively stable market environment.
The market opened with a surge in buying interest, driven by a decline in market rates following an employment report that indicated a balanced economic outlook. This report strengthened the belief that the economy is on a soft/no landing path and that the Federal Reserve might implement another 25-basis point rate cut, bringing the fed funds rate to 4.25-4.50% at the upcoming December FOMC meeting.
The fed funds futures market supported this view, with the probability of a rate cut rising from 70.2% before the employment report to over 90% after its release, standing at 85.1% as of now, according to the CME FedWatch Tool.
The 2-year Treasury note yield decreased by five basis points to 4.10%, while the 10-year note yield fell three basis points to 4.15%.
Despite the favorable rate-cut outlook, market participants remained cautious due to valuation concerns and potential short-term overbought conditions. The CBOE Volatility Index dropped to 12.72, its lowest level since mid-July, indicating a reduced demand for hedging against downside risk.
Strong performances from mega-cap stocks and positive earnings reports from companies like lululemon athletica (LULU: 399.60, +15.9%), DocuSign (DOCU: 106.99, +27.9%), and Ulta Beauty (ULTA: 428.17, +9.0%) supported the broader market. The S&P 500 and Nasdaq Composite reached new record highs, with the consumer discretionary sector leading gains at +2.4%, followed by communication services at +1.4% and information technology at +0.1%. The Vanguard Mega-Cap Growth ETF (MGK) rose 0.7%.
Market breadth was mixed, with decliners outnumbering advancers by a 5-to-4 margin at the NYSE, while advancers led decliners by a 13-to-8 margin at the Nasdaq.
- Nasdaq Composite: +32.3% YTD
- S&P 500: +27.7% YTD
- S&P Midcap 400: +19.8% YTD
- Russell 2000: +18.9% YTD
- Dow Jones Industrial Average: +18.5% YTD
Economic data highlights:
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Today's News
Lululemon (LULU, Financial) experienced a remarkable surge as its Q3 results impressed investors, propelling shares up by 19%. The company reported a 9% rise in sales, boosting profits by 46% and improving its gross profit margin by 150 basis points. Despite a slight decline in U.S. comparable sales, strong international performance contributed to an optimistic outlook for Q4 with projected revenue growth of 8% to 10%.
AMD (AMD, Financial) shares fell 2% following comments from an Amazon (AMZN) executive indicating insufficient demand for AMD's AI accelerators within Amazon Web Services. While AMD reiterated its partnerships with several major companies, the lack of demand from Amazon raises questions about the immediate uptake of its AI technology.
Apple (AAPL, Financial) is advancing its plans to develop its own cellular modem chips, aiming to replace Qualcomm's (QCOM, Financial) components. The new modem system is expected to debut in the iPhone SE in 2025, marking a significant step towards reducing reliance on Qualcomm by 2027.
HP Enterprise (HPE, Financial) saw a 2.5% rise in premarket trading after Citi upgraded the stock to Buy, citing strong demand in server and enterprise networking and expanding AI opportunities. The company's positive momentum in AI and potential EPS accretion from the Juniper acquisition were highlighted as key factors.
Rubrik (RBRK, Financial) stock soared 22% in premarket trading following a strong Q3 performance and upward revision of fiscal 2025 guidance. KeyBanc Capital Markets raised its price target, acknowledging Rubrik's impressive annual recurring revenue growth and improving margins.
Wells Fargo analysts updated their "Core" list, featuring industry-leading companies suitable for long-term investment. Notable inclusions are Alphabet (GOOGL, Financial), Comcast (CMCSA, Financial), and The Walt Disney Company (DIS, Financial), chosen for their robust growth estimates and financial stability.
AMC Entertainment (AMC, Financial) announced plans to issue up to 50 million shares of Class A common stock, leading to a 10% drop in premarket trading. The stock sales will be conducted as "at-the-market" offerings, potentially impacting the company's share price.
OpenAI is considering removing a clause that limits Microsoft's (MSFT, Financial) access to its advanced models upon achieving artificial general intelligence (AGI). This move could allow Microsoft continued investment and access to OpenAI technology, enhancing their partnership in AI development.
Disney (DIS, Financial) and Deere (DE) announced dividend increases, reflecting strong financial performance. Disney raised its dividend by 11.1%, while Deere increased its payout by 10.2%, signaling confidence in their respective growth trajectories.
Goldman Sachs identified companies with improving operating margins, including Enphase Energy (ENPH) and Charles River Laboratories (CRL). These stocks are expected to see significant margin improvements in 2025, presenting attractive investment opportunities.
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