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S&P 500 rises 2.2% on positive data and retailer earnings

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2023-11-20

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The Standard & Poor's 500 index rose 2.2% last week, extending its winning streak to a third week as investors were encouraged by better-than-expected October inflation data and stronger-than-expected quarterly results from some retailers.

Several US retail majors made strong gains after reporting better results for the latest quarter than analysts expected. Gap shares surged 30.6% after reporting much higher profit than Wall Street had forecast, more than doubling the stock’s gain for the year so far. Ross Stores shares climbed 7.2% after reporting stronger profit and revenue than expected.

Target shares were up nearly 20%, and shares in hardware giant Home Depot were up more than 5% for the week.

However, Walmart shares ended the week down 6.5% after its quarterly report failed to impress investors. Shares in BJ’s Wholesale Club fell 4.8% despite also reporting better results than expected.

The gains on Friday were weak. The S&P 500 edged up by just 5.78 points, or 0.1%, to 4,514.02 but is now near its highest level in three months. The Dow inched up by 1.81, or less than 0.1%, to 34,947.28, and the Nasdaq composite gained 11.81, or 0.1%, to 14,125.48.

For the week, the S&P 500 was up almost 2%, the Dow rose 2.24%, and the Nasdaq jumped 2.37%.

The S&P 500 is now up 8.7% for the month of November, putting it on track for its largest monthly gain this year if it can sustain the climb through the end of the month. It is up almost 18% for the year to date.

The Dow is up 5.4% so far this year, and the Nasdaq is up 35%.

In the bond market, the yield on the 10-year Treasury dipped to 4.43% from 4.44% late Thursday. Just a few weeks ago, it was above 5%, at its highest level since 2007, undercutting prices for stocks and other investments.

The S&P/ASX 200 dropped 9 points, or 0.13%, to 7,049.4 at the close. The Aussie dollar was trading at 64.33 US cents after rising above 65 cents earlier in the week.

The ASX is looking at a 28 point gain from Friday futures trading when trading resumes this morning.

Eurozone shares gained 3.3%, and Japanese shares rose 3.1%. Chinese shares fell 0.5% with ongoing concerns about the Chinese property market. The continuing global rebound also helped push up Australian shares, which rose 1%, led by IT, property, material, and health stocks.

10-year bond yields fell by 15-20 basis points on optimism major central banks have finished raising rates. Oil prices fell with rising inventories but rose late Friday after Saudi Arabia hinted at more production cuts in 2024, and metal and iron ore prices rose.

The advance came as economic data showed consumer prices as well as producer prices were tamer than expected last month, helping ease investors' worries about inflation and interest rate increases.

Economic reports this week ahead of the holiday-related closures for Thanksgiving on Thursday include October US leading economic indicators today, October existing home sales on Tuesday, and October durable goods orders on Wednesday. Minutes from the latest Federal Open Market Committee meeting will be released on Tuesday. And don’t forget the Black Friday sales surge from Thursday/Friday.

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