S&P 500 ends lower on mixed Fed messages, PCE on deck
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[November 30, 2023] By
Stephen Culp
NEW YORK (Reuters) - U.S. stocks edged lower on Wednesday as a robust
upward GDP revision eased recession fears, while Federal Reserve
officials' remarks raised questions about the duration of the central
bank's restrictive policy.
The Nasdaq joined the S&P 500 in negative territory, while the Dow ended
nominally higher, as investors took a wait-and-see position ahead of
Thursday's crucial personal consumption expenditure (PCE) inflation
report.
Despite the indexes' languid movement over the last three sessions,
November has been a banner month. The S&P 500 remains on track to notch
its biggest monthly percentage gain since July 2022.
"The market has had huge returns, so there's certainly profit taking and
repositioning; there's some consolidation going on here," said Tim
Ghriskey, senior portfolio strategist Ingalls & Snyder in New York.
"We've had very strong earnings and there's a lot of optimism. And
because of that, there's a repositioning of gains."
In contrast to Barkin, Fed Governor Christopher Waller, widely
considered a hawk, provided reassurance on Tuesday that the Fed has
probably reached the end of its rate hike cycle. He hinted at the
possibility of cutting rates in the near term to engineer a "soft
landing" and avoid recession.
"The Fed's on hold now, but the mantra is still higher for longer,"
Ghriskey added. "The economy continues to be relatively strong. There's
no reason for the Fed to lower rates and risk a re-emergence of
inflation."
Indeed, on Wednesday Cleveland Fed President Loretta Mester reiterated
the central bank's need to remain "nimble" in its response to economic
data.
Earlier in the session the Commerce Department upwardly revised its
initial estimate on third-quarter gross domestic product, which
underscored U.S. economic resilience but also appeared to give the Fed
little reason to start cutting rates in the near future, as long as
inflation remains well above its 2% target.
The Fed's Beige Book, which provides a region-by-region snapshot of the
U.S. economy, was released mid-afternoon, showing economic activity has
slowed modestly under the central bank's restrictive monetary policy.
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Traders work on the floor at the New York Stock Exchange (NYSE) in
New York City, U.S., November 17, 2023. REUTERS/Brendan McDermid/File
Photo
The Dow Jones Industrial Average rose 13.44 points, or 0.04%, to
35,430.42, the S&P 500 lost 4.31 points, or 0.09%, at 4,550.58 and
the Nasdaq Composite dropped 23.27 points, or 0.16%, to 14,258.49.
Among the 11 major sectors of the S&P 500, real estate and financial
notched the largest percentage gains, while communications services
dropped 1.1%.
Interest rate sensitive momentum stocks, led by Microsoft Corp and
Apple Inc were the heaviest weights on the S&P 500.
Shares of Humana Inc and Cigna Group were down 5.5% and 8.1%,
respectively, after a source familiar with the matter said the
health insurers are in talks to merge.
General Motors jumped 9.4% after the automaker announced a $10
billion share buyback and a 33% dividend boost. Ford Motor Co shares
advanced 2.1%.
CrowdStrike Holdings surged 10.4% following its consensus-beating
fourth-quarter revenue forecast.
NetApp leaped 14.6% after the cloud-based data management platform
increased its annual profit forecast.
Advancing issues outnumbered decliners on the NYSE by a 2.06-to-1
ratio; on Nasdaq, a 1.51-to-1 ratio favored advancers.
The S&P 500 posted 30 new 52-week highs and one new low; the Nasdaq
Composite recorded 82 new highs and 97 new lows.
Volume on U.S. exchanges was 11.42 billion shares, compared with the
10.45 billion average for the full session over the last 20 trading
days.
(Reporting by Stephen Culp; Additional reporting by Shristi Achar A
and Amruta Khandekar in Bengaluru; Editing by Richard Chang)
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