Stocks Mixed as Sectors Diverge on Data and Rates…..

U.S. stocks finished mixed in a choppy session that saw cyclically-natured Financials and Energy sectors rise, while growth issues such as Information Technology extended a recent soft patch. Consumer Discretionary stocks also moved lower as solid earnings results from Best Buy and Dick’s Sporting Goods were scrutinized on the Street. Zoom Video Communications saw heavy pressure despite its better-than-expected earnings results. The sector moves came as Treasuries slid to apply upward pressure on yields, with the global markets grappling with the path of monetary policies amid the rising inflationary environment. Moreover, a host of solid preliminary global Manufacturing and Services PMIs were digested, including an acceleration in the former out of the U.S. The U.S. dollar dipped, and crude oil prices rallied despite a global coordinated release of strategic petroleum reserves, led by the U.S. Gold added to a recent drop. Europe finished mostly lower amid the persistent rise in bond yields and lingering COVID-19 concerns, and Asia finished mixed as Japan was on a holiday break.

The Dow Jones Industrial Average rose 195 points (0.6%) to 35,814, and the S&P 500 Index increased 8 points (0.2%) to 4,691, while the Nasdaq Composite declined 80 points (0.5%) to 15,775. In moderately-heavy volume, 4.2 billion shares of NYSE-listed stocks were traded, and 5.3 billion shares changed hands on the Nasdaq. WTI crude oil gained $1.75 to $78.50 per barrel. Elsewhere, the gold spot price fell $14.40 to $1,791.90 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—dipped 0.1% to 96.48.

The preliminary Markit U.S. Manufacturing PMI Index for November increased to 59.1 from October’s unrevised 58.4 figure, right in line with the Bloomberg consensus estimate and remained solidly in expansion territory as denoted by a reading above 50. The preliminary Markit U.S. Services PMI Index showed growth (above 50) for the key U.S. sector surprisingly decelerated, dipping to 57.0 from October’s 58.7 figure and compared to forecasts of a rise to 59.0.

When looking at the composite index of output from both sectors, Markit said, “The U.S. economy continues to run hot. Growth remains above the survey’s long-run pre-pandemic average as companies continue to focus on boosting capacity to meet rising demand.” However, Markit also mentioned that the slowdown shows how the economy is struggling to cope with supply constraints.

The Richmond Fed Manufacturing Activity Index remained in expansion territory (a reading above zero), but dipped to 11 from October’s 12 reading, right in line with forecasts. New order volume dipped but remained in expansion territory. Capacity utilization also dipped to a neutral level of zero, while growth in shipments accelerated, and order backlogs decreased but remain in expansion territory.

Treasuries were lower, with the yield on the 2-year note rising 4 basis points (bps) to 0.61%, the yield on the 10-year note gaining 5 bps to 1.68%, and the 30-year bond rate increasing 6 bps 2.04%.

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