© Reuters. FILE PHOTO: People are seen on Wall Street outside the New York Stock Exchange (NYSE) in New York City, U.S., March 19, 2021. REUTERS/Brendan McDermid/File Photo
By Ambar Warrick and Devik Jain
(Reuters) – The Nasdaq led Wall Street higher on Thursday as chipmaker Nvidia (NASDAQ:) rallied on robust third-quarter results, while a fresh batch of positive retail earnings indicated strength in consumer spending against the backdrop of rising inflation.
But the Dow Jones was held back by losses in network gear maker Cisco Systems Inc (NASDAQ:), which tumbled 8.3% after it forecast current-quarter revenue below expectations due to supply chain shortages and delays.
Nvidia shares jumped 10.7% to a record high after the company beat quarterly estimates and forecast strong fourth-quarter revenue, expecting to benefit from growth in its data center business and investments in the metaverse.
Broad gains in chip-making stocks pushed the Philadelphia semiconductor index up 2.1% to a record high.
Strong retail earnings continued to pour in, with Macy’s Inc (NYSE:) and Kohl’s Corp (NYSE:) up 15.8% and 6.3%, respectively, after they raised their annual sales and profit forecasts.
The S&P consumer discretionary sector rose 0.6%.
Coty (NYSE:) Inc added 1.5% after the Hugo Boss fragrance maker forecast modest revenue growth for the next several years. Shares of peer Estee Lauder (NYSE:) Cos Inc slipped 3.1%
Positive readings from Walmart (NYSE:) Inc and Target Corp (NYSE:) this week showed that consumer sentiment has persevered through rising inflation, and that retailers are set for a strong holiday season.
“The stock market should resume its year-end rally based on the good earnings season and good macro news that’s continuing to flow,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“Inflation has gone up but for now the consumer is not showing any signs of pulling back. And that’s a key.”
Still, concerns over further increases in price pressure, along with uncertainty over the Federal Reserve’s plans for tightening kept Wall Street somewhat muted this week.
Data also showed the number of Americans filing for unemployment benefits fell closer to pre-pandemic levels last week, albeit at a slower-than-expected pace.
Ecommerce major Alibaba (NYSE:) Group slumped 9.7% after it forecast annual revenue to grow at its slowest pace since its 2014 stock market debut amid slowing consumption, increasing competition and a regulatory crackdown.
At 9:42 a.m. ET, the was down 21.57 points, or 0.06% at 35,909.48 and the was up 8.06 points or 0.17% at 4,696.73. The was up 37.99 points, or 0.24%, at 15,959.56.
Broader technology stocks rose as investors sought sectors less exposed to rising inflation and supply chain issues.
Among other stocks, Boeing (NYSE:) Co rose 1% after Virgin Australia said it would add seven more 737 NG planes to its fleet, and as J.P. Morgan upgraded the planemaker’s stock to “overweight” from “neutral”.
Kraft Heinz (NASDAQ:) dipped 3.6% after the packaged food maker announced a secondary share offering.
Advancing issues outnumbered decliners by a 1.27-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.13-to-1 ratio on the Nasdaq.
The S&P index recorded 25 new 52-week highs and seven new lows, while the Nasdaq recorded 58 new highs and 190 new lows.
Stats had a positive effect on the European stock market. European growth stocks
West European stock indexes closed Wednesday’s trading with a confident growth. Traders evaluated the fresh batch of statistics and bought European growth stocks.
What influenced European stocks to high growth?
GDP volume in France rose 0.2% in the third quarter compared to the previous three months, final data from the national statistics institute Insee showed. The final data coincided with a preliminary estimate. Analysts, on average, had not expected a revision, according to a Trading Economics survey. GDP growth slowed from a 0.5% rebound in the second quarter.
Consumer prices in France, harmonized with European Union standards, rose 7.1% year-over-year in November. Insee also reported. The November rate of increase in consumer prices coincided with that of October, and analysts polled by Trading Economics expected inflation to remain at the same level.
Consumer spending in the country collapsed by 2.8% in October compared with the previous month. Analysts polled by Bloomberg expected a more moderate decline of 1 percent. The consensus forecast of experts polled by Trading Economics envisioned a 0.6% decline. The decrease in consumer spending was the maximum since April 2021.
The number of unemployed in Germany increased by 17 thousand in November, according to the Federal Employment Agency of Germany. The rise in the index was marked at the end of the sixth month in a row. Experts interviewed by Bloomberg agency, on average, predicted an increase of 13.5 thousand. Respondents to Trading Economics expected an increase of 13 thousand.
Additional positives for investors in European markets on Wednesday were messages about easing of coronavirus restrictions in a lot of cities in China. Note that Amazon’s stock price is also rising if you are interested in the U.S. stock market.
Earlier, we reported that U.S. stock indices were up 2.2-4.4%.
U.S. stock indices today rose 2.2-4.4%
The U.S. stock indices today closed the trading on Wednesday with the confident growth due to the statements of the Federal Reserve Chairman, Jerome Powell, who confirmed that the U.S. Central Bank could slow down the basic rate rise as early as in December.
Judging by the quotations of futures on the level of the prime rate, U.S. stock market indices expect the Federal Reserve to raise it by 50 basis points (bps) in December – to 4.25-4.5%. The U.S. Central Bank has increased the rate by 75 bps at each of the previous four meetings. Against this background, the current stock price of Facebook also rose.
The report by the industry organization ADP, published on Wednesday, showed a slowdown in job growth in the U.S. private sector. Their number increased by 127,000 in November, the lowest rate since January, said the ADP. Analysts polled by The Wall Street Journal on average had forecast job growth of 190,000 after a jump of 239,000 in October.
Data from the U.S. Commerce Department, also released Nov. 30, showed higher-than-reported growth in the U.S. economy in the third quarter. U.S. GDP grew at an annualized rate of 2.9% in the July-September quarter, rather than the previously reported 2.6%. Experts polled by Trading Economics had expected an average revision of 2.7%.
Also, the Federal Reserve released its regional Beige Book survey Wednesday, showing that economic activity in the United States was little changed in the fall.
Federal Reserve banks in five counties reported a weak increase in activity in October and November, while the other seven reported a stable or slightly declining economy.
The Dow Jones Industrial Average index was up 737.24 points (2.18%) at 34589.77 as of Wednesday’s market close.
Standard & Poor’s 500 rose 122.48 points (3.09%) to 4,080.11 points.
The Nasdaq Composite added 484.22 points (4.41%) to 1,468.
All three U.S. stock market indices closed November, with the Dow Jones gaining 5.3%; the S&P 500 gaining 4.6%, and the Nasdaq Composite gaining 3.3%.
Earlier we reported that Main European stock indices were rising during trading.
Main European stock indices rise in trading
Main European stock indices are rising during trading on Thursday. The Stoxx Europe 600 composite index of the largest companies in the region rose 0.58% to 442.60 points. German DAX is up 0.34%, British FTSE 100 is up 0.15%, French CAC 40 is up 0.01%, Italian FTSE MIB is up 0.47% and Spanish IBEX 35 is up 0.45%.
What affected the best European stock indices?
During a speech at the Brookings Institution on Wednesday, Powell reiterated that the Fed could slow the rise in the prime rate as early as December. “The time to moderate the pace of rate hikes may come as early as the next meeting,” Powell said.
The Fed chair, meanwhile, tried to balance those words with “hawkish” signals. Market Watch notes. He said that the U.S. Central Bank will have to raise the rate higher than could be expected a few months ago. Moreover, Powell made it clear that the issue of rate cuts is irrelevant at the moment. By the way, his words influenced the growth of the current stock price of the NASDAQ-100.
Another Fed official, Board of Governors member Lisa Cook said she believes the regulator needs to keep raising rates as inflation is still too high. “We’ve started to get more favorable inflation data. But I would be cautious about drawing big conclusions on just one month’s worth of data,” Cook said during a speech at the Detroit Economic Club.
Earlier, we reported on how European stock indexes were falling following Asian stock markets.
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