Stocks rise at open as S&P, Dow attempt to recover from worst start to Thanksgiving week in 45 years

U.S. stock indexes Wednesday rose at the start of trade Wednesday, as they look to recapture some of the ugly losses accumulated over the past two sessions on the back of a persistent rout in once-highflying tech stocks and declines in oil.

U.S. financial markets will be closed Thursday for the Thanksgiving Day holiday and see an early close Friday.

The Dow Jones Industrial Average DJIA, +0.41%  rose 119 points, or 0.5%, to 24,586. The S&P 500 SPX, +0.62% advanced 16.24 points, or 0.6%, to 2,658, while The Nasdaq Composite Index NQZ8, +1.45% gained 79 points to reach 6,983, a rise of 1.1%.

On Tuesday, the Dow fell 551.8 points, or 2.2%, to end at 24,465.64, and tumbled by as many as 648 points at the session’s lows. The S&P 500 index closed with a loss of 48.84 points, or 1.8%, at 2,641.9, while the Nasdaq Composite Index shed 119.65 points to 6,908.82, a drop of 1.7%.

Tuesday’s decline erased year-to-date gains for both the Dow and S&P 500, while the Nasdaq now clings to a 0.1% advance for 2018. Month to date, the Nasdaq has fallen 5.4%, the S&P and Dow have retreated 2.6% in November.

According to Dow Jones Market Data, the Monday-to-Tuesday descent for the S&P 500 and Dow mark their worst starts to the Thanksgiving week since 1973, and the steepest for the Nasdaq since 2000.

What’s driving the market?

U.S. investors were hoping for a respite to counter the worst start to Thanksgiving week in 45 years, with fears about valuations of technology and internet-related stocks, sluggish growth, policy errors by the Federal Reserve and uncertainty about trade relations between the U.S. and China swirling in investors’ minds.

Contributing some early upward momentum to the energy sector were modest gains in crude-oil prices, with data released Tuesday momentarily alleviating growing worries about global oversupply, which has driven U.S. benchmark oil CLF9, +1.82% deep into bear-market territory, defined as a decline of a at least 20% from a recent peak.

New data on orders for American-manufactured goods were released before the bell Wednesday, showing the largest decline in durable orders in 15 months. More important, the report from Census Bureau showed orders for capital goods falling for the third month in a row, adding to fears that U.S. business investment is decelerating.

Looking ahead, investors will get a new reading of existing home sales and consumer sentiment, after a series of reports of the housing market has reinforced the view that increases to benchmark interest rates are eroding confidence in the housing industry.

What are strategists saying?

I know better than to declare bottoms in markets,” Tom Essaye, president of the Sevens Report, wrote in a note to clients. “But yesterday had some of what we look for when trying to identify selling capitulation, including: an initial morning plunge that market the low for the day, stabilization of recent laggards, and a lack of a spike in the VIX.

America’s battered equity markets are limping towards the Thanksgiving holiday with precious little to be thankful for,” wrote J.R. Zhou, chief market strategist at broker Infinox, in a Wednesday note.

He said the realization that the strength of America’s domestic economy is being rendered increasingly irrelevant by the continued weakness of its trading partners, and fears that “the Federal Reserve’s hawks risk becoming an albatross” are weighing on market sentiment and contributing to volatile markets.

Which data are in focus?

-New applications for unemployment benefits rose to 224,000 for the week ended Nov. 17, the highest reading in more than four months.

-Orders for U.S.-manufactured durable goods fell by 4.4% in October, the largest decline in 15 months, and below expectations for a 3.4% decline, per a MarketWatch survey of economists. The report also showed orders for “core” capital orders falling slightly, further signaling a slowing in business investment.

-Existing-home sales for October are due at 10 a.m., with 5.18 million home sales forecast

-A November reading of consumer sentiment also is slated for that time. Wall Street is expecting a 98.3 reading

-Leading economic indicators for October are due at 10 a.m.

What stock are in focus

Deere & Co. DE, +3.96% shares were up at the start of trade Wednesday, even after the farm-equipment maker reported disappointing quarterly profits. Shares were up 1.9% in morning trade, though the stock remains down more than 10% year-to-date.

Shares of Footlocker, Inc. FL, +18.12% are up more than 15% early Wednesday, following a Tuesday-evening earnings release that showed the company beating Wall Street estimates for third-quarter profits.

Autodesk Inc. ADSK, +8.37% stock is surging close to 12% Wednesday, after the company reported earnings, sales and outlook beats, Tuesday evening.

Shares of Mylan N.V. MYL, -0.09% edged lower Wednesday, one day after the FDA issued a warning letter summarizing violations of manufacturing regulations, related to its inspection of a facility in West Virginia.

Growth technology stocks are rising Wednesday, during a month when these erstwhile market leaders have otherwise fallen sharply. Netflix, Inc. NFLX, -0.86% shares are up 1.4%, while Amazon Inc. AMZN, +2.02% was up 2.8%

How are other markets trading?

Asian markets traded mixed Wednesday, with most of the region’s major indexes recovering from session lows into the close. Japan’s Nikkei NIK, -0.35% fell by 0.4%, while Australia’s ASX XJO, -0.51% fell by 0.5%. Hong Kong’s Hang Seng Index HSI, +0.51% recovered from early losses to end the day up 0.5%, while China’s Shanghai Composite Index SHCOMP, +0.21% edged 0.2% higher.

European markets were trading higher Wednesday, with the Stoxx Europe 600 SXXP, +0.73% rising 0.6% and the FTSE 100 UKX, +1.15% up 1%.

Crude oil CLF9, +1.82% is staging a relief rally Wednesday, up 1.8% during a November where its price has fallen more than 16%. Gold prices GCZ8, +0.47% were edging up 0.4%, while the U.S. dollar DXY, -0.18% is down 0.2%.

 

/marketwatch.com

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