US stocks closed in modest gains on Tuesday, capping off a day of subdued trading as investors treaded cautiously amid growing signs that the robust rally experienced in November might be reaching an inflection point.
The Dow Jones Industrial Average (^DJI) managed a modest gain of over 0.2%, while the Nasdaq Composite (^IXIC), driven by technology stocks, saw an increase of approximately 0.3%. The S&P 500 (^GSPC), a key benchmark, rose by 0.1%.
As November draws to a close, investors are grappling with the possibility of a pullback after an exceptionally strong surge that has set stocks on track for their best monthly performance in over a year.
Investors are buoyed by the belief that the Federal Reserve has concluded its interest rate hikes. However, conflicting views emerged during two separate speeches on Tuesday by Fed Governor Michelle Bowman and Fed Governor Christopher Waller, indicating a lack of consensus within the central bank.
Bowman expressed her opinion that the Fed might need to raise rates further to address inflation, stating, “to bring inflation down to our 2% target in a timely way.” In contrast, Waller conveyed growing confidence that rates are at appropriate levels, although he acknowledged the need for additional data. His remarks led to a drop in Treasury yields, with the 10-year yield (^TNX) falling by approximately 5 basis points to around 4.34%, near levels observed in September.
Investors are proceeding cautiously in anticipation of two crucial sets of economic data scheduled for later in the week. Wednesday will bring an update on third-quarter GDP, while Thursday’s PCE reading on consumer inflation, the Federal Reserve’s favored indicator, is expected to shape expectations for future rate decisions.
In Tuesday’s economic news, the Conference Board reported an increase in consumer confidence for November. The Conference Board’s index rose to 102.0, up from a revised 99.1 in October. Despite this improvement, the Expectations Index remained below 80 for the third consecutive month, historically signaling a potential recession within the next year, according to the Conference Board.
With Black Friday marking the start of the holiday shopping season, investors are closely monitoring the performance of retailers. Cyber Monday saw a substantial surge in online spending, with consumers shelling out $12.4 billion, a 9.6% increase compared to the previous year, according to Adobe Analytics. Notably, between 10 and 11 p.m. Eastern, spending peaked at $15.7 million per minute as consumers sought to capitalize on last-minute deals.
In the commodities market, oil prices experienced gains as the dollar weakened, making it more affordable for holders of other currencies. Anticipation of additional output cuts at the delayed OPEC+ meeting further fueled these gains. Brent crude futures (BZ=F) settled just below $82 per barrel, while West Texas Intermediate (WTI) crude futures closed with a more than 2% increase, settling above $76.
In conclusion, the day ended with stocks making modest gains, reflecting a cautious sentiment among investors as they navigate the intricate balance between recent market optimism and lingering uncertainties.
Source: Yahoo Finance