Hopes on Vaccine, Fiscal Fronts Continue to Aid Stocks…..
U.S. equities finished mixed, as prospects of a COVID-19 vaccine on the near horizon were somewhat hampered following a late-day report that Pfizer is facing supply-chain obstacles with the rollout of its vaccine. Meanwhile, hopes of some sort of fiscal relief resurfaced to keep sentiment buoyed, along with a plethora of mostly positive global services sector reports, and a larger-than-expected moderation in U.S. initial jobless claims. In other news on the equity front, as CrowdStrike topped Q3 forecasts and issued upbeat guidance, but Splunk missed quarterly expectations and issued disappointing guidance, Costco Wholesale’s strong sales growth continued though at a slower pace, and Dow member Chevron Corporation became the latest energy giant to slash capital spending plans. Treasury yields were lower amid a modest increase in bond prices and the U.S. dollar continued to fall, while crude oil prices nudged higher as OPEC resumed its production cut discussions and gold gained ground. Markets in Europe and Asia finished mixed.
The Dow Jones Industrial Average rose 86 points (0.3%) to 29,970, the S&P 500 Index ticked 2 points (0.1%) lower to 3,667, and the Nasdaq Composite gained 28 points (0.2%) to 12,377. In heavy volume, 979 million shares were traded on the NYSE and 5.1 billion shares changed hands on the Nasdaq. WTI crude oil was $0.36 higher at $45.64 per barrel and wholesale gasoline added $0.02 to $1.26 per gallon. Elsewhere, the Bloomberg gold spot price gained $11.00 to $1,842.28 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—decreased 0.4% to 90.71.
Jobless claims moderate more than expected, November services data continue to show growth…..
Weekly initial jobless claims came in at a level of 712,000 for the week ended November 28, below the Bloomberg estimate of 775,000 and the prior week’s upwardly-revised 787,000 level. The four-week moving average declined by 11,250 to 739,500, while continuing claims for the week ended November 21 fell by 569,000 to 5,520,000, south of estimates of 5,800,000. The four-week moving average of continuing claims dropped by 425,500 to 6,194,250.
The November Institute for Supply Management (ISM) non-Manufacturing Index showed expansion in the key services sector (a reading above 50) decelerated by a slightly smaller amount than anticipated, declining to 55.9 from October’s 56.6 level, and modestly above forecasts of a decrease to 55.8. The index slipped as the new orders and business activity components both declined but remained comfortably above the key 50 level, while employment growth accelerated. The ISM said, “Respondents’ comments are mixed about business conditions and the economy. Restaurants continue to struggle with capacity constraints and logistics. Most companies are cautious as they navigate operations amid the pandemic and the aftermath of the U.S. presidential election.”
The final Markit U.S. Services PMI Index for November was unexpectedly revised higher to 58.4 from the preliminary estimate of 57.7, and versus forecasts of a modest downward adjustment to 57.5. The index was up from October’s 56.9 figure and the 51.6 reading a year ago. A reading above 50 denotes expansion. Markit’s release is independent and differs from the ISM report, as it has less historic value and Markit weights its index components differently, while its survey respondents include those that vary more in size, including small and medium-sized companies.
Treasuries were modestly higher, as the yield on the 2-year note lost 1 basis point (bp) to 0.15%, the yield on the 10-year note was down 4 bps at 0.91%, and the 30-year bond rate declined 5 bps to 1.66%.
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