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Beyond the Numbers

U.S. Stocks May Start Holiday Week On Upbeat Note
11/22/2021 8:44 AM

The major U.S. index futures are currently pointing to a higher open on Monday following the mixed performance seen last week.

Trading activity may be somewhat subdued ahead of the Thanksgiving Day holiday on Thursday, although the holiday week is typically positive for the markets.

“The last five trading days of November are traditionally positive, since 1950,” Sam Stovall, chief investment strategist at CFRA, said, according to CNBC.

He added, “There’s a two-thirds likelihood the market is up on the day before Thanksgiving and a 57% likelihood the day after Thanksgiving, and a 71% likelihood that it’s up on Monday.”

Traders are also likely to keep an eye on Washington, as President Joe Biden could announce his choice for Federal Reserve Chair as soon as this week.

Current Fed Chair Jerome Powell and Fed Governor Lael Brainard are seen as the most likely candidates, with Brainard seen as the more dovish option.

Following the mixed performance seen on Thursday, the major U.S. stock indexes once again moved in opposite directions during trading on Friday. While the tech-heavy Nasdaq reached a new record closing high, the Dow moved lower for the third straight session.

The Nasdaq climbed 63.73 points or 0.4 percent to 16,057.44, but the Dow slid 268.97 points or 0.8 percent to 35,601.98. Meanwhile, the S&P 500 spent the day bouncing back and forth across the unchanged line before closing down 6.58 points or 0.1 percent at 4,697.96.

The major averages also turned in a mixed performance for the week. The Nasdaq jumped by 1.2 percent and the S&P 500 rose by 0.3 percent, while the Dow slumped by 1.4 percent.

Renewed Covid-19 concerns weighed on cyclical stocks as a brutal fourth wave of the coronavirus pandemic sweeps across Europe.

Austria has announced a full national Covid-19 lockdown starting on Monday, while Germany has announced more restrictions on unvaccinated people.

The potential of more European countries reinstating full lockdowns sparked worries the pandemic could once again weigh down the global economy.

Meanwhile, the tech-heavy Nasdaq benefitted from continued strength among technology stocks following some upbeat earnings news.

Shares of Intuit (INTU) surged after the financial software firm reported better than expected fiscal first quarter results and raised its full-year revenue guidance.

Cybersecurity company Palo Alto Networks (PANW) also moved higher after reporting fiscal first quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, shares of Applied Materials (AMAT) came under pressure after the semiconductor equipment maker reported fiscal fourth quarter results that missed expectations and provided disappointing guidance.

Overall trading activity was somewhat, however, as a lack of major U.S. economic data kept some traders on the sidelines.

Energy stocks saw substantial weakness on the day, moving sharply lower along with the price of crude oil.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index dove by 4.6 percent, the NYSE Arca Oil Index plummeted by 3.9 percent and the NYSE Arca Natural Gas Index tumbled by 2.2 percent.

A decrease by the price of gold also contributed to weakness among gold stocks, resulting in a 1.9 percent slump by the NYSE Arca Gold Bugs Index.

Telecom, airline and banking stocks also saw notable weakness on the day, while some strength was visible among biotechnology and utilities stocks.

Commodity, Currency Markets

Crude oil futures are slipping $0.36 to $75.58 a barrel after plunging $2.47 to $75.94 a barrel last Friday. Meanwhile, after falling $9.80 to $1,851.60 an ounce in the previous session, gold futures are sliding $11.90 to $1,839.70 an ounce.

On the currency front, the U.S. dollar is trading at 114.11 yen versus the 113.99 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1274 compared to last Friday’s $1.1290.

Asia

Asian stocks ended mixed on Monday after a trio of Fed policymakers signaled that the topic of a faster taper might be on the table when the Federal Open Market Committee meets in December.

Worries about the global economy due to the resurgence of coronavirus cases and fresh lockdown measures in Europe also served to keep underlying sentiment cautious.

Chinese stocks rose notably as the country's central bank signaled possible easing measures to aid the economy's recovery.

In its latest quarterly monetary policy report, published on Friday, the People's Bank of China dropped previous phrases to "control the valve on money supply" and vowing not to "flood the economy with stimulus," signaling a shift in stance toward more supportive measures.

Earlier in the day, the People's Bank of China maintained its benchmark loan prime rates for the 19th consecutive month, as widely expected.

China's benchmark Shanghai Composite Index rose 21.71 points, or 0.6 percent, to 3,582.08, while Hong Kong's Hang Seng Index ended down 98.63 points, or 0.4 percent, at 24,951.34 after comments by advisers to the Chinese central bank about risks of "stagflation."

Japanese shares reversed early losses to end on a flat note. The Nikkei 225 Index finished marginally higher at 29,774.11, while the broader Topix closed with a negative bias at 2,042.82. Oil explorers led losses, with Inpex plunging 4.5 percent. Tech shares finished broadly higher, with Advantest rising 1 percent.

Australian markets ended lower, dragged down by banks, energy and travel stocks. The benchmark S&P/ASX200 Index dropped 43.40 points, or 0.6 percent, to 7,353.10, while the broader All Ordinaries index ended down 41.60 points, or 0.5 percent, at 7,688.30.

Banks ANZ, Commonwealth and Westpac fell around 2 percent each amid signs of a flattening of the yield curve.

Santos, Woodside Petroleum and Beach Energy lost 2-4 percent as oil extended declines amid fresh prospects of lockdowns in Europe and on signs the U.S., China and Japan are preparing to tap national crude reserves.

In the travel sector, Flight Centre slumped 7.1 percent, Corporate Travel Management lost 6 percent and Qantas gave up 4 percent.

Seoul stocks rallied after data showed South Korea's exports are poised to extend a run of double-digit gains in November.

The Kospi shot up 42.23 points, or 1.4 percent, to 3,013.25. Chip heavyweights led the surge, with Samsung Electronics and SK Hynix jumping 5.2 percent and 7.2 percent, respectively.

Europe

European stocks have moved to the downside over the course of the day as traders weigh renewed Covid concerns against optimism about a faster economic recovery.

On the Covid-19 front, Austria closed shops, restaurants and festive markets in the most dramatic Covid-19 restriction seen in Western Europe for months.

Meanwhile, the People's Bank of China deleted several phrases in its latest monetary policy report, a move that economists say signals a shift toward more supportive monetary policy.

While the German DAX Index is down by 0.4 percent, the French CAC 40 Index is down by 0.3 percent and the U.K.’s FTSE 100 Index is down by 0.2 percent.

Telecom stocks are in focus, with Telecom Italia surging higher after a $12 billion bid from U.S. fund KKR to take Italy's largest phone group private.

Similarly, Norway's Telenor has risen after it agreed to merge its telecom unit with Thailand's Charoen Pokphand Group in a deal valued at about $8.61 billion.

On the other hand, mobile telecoms equipment maker Ericsson has moved lower after agreeing to buy cloud communications firm Vonage for $6.2 billion.

Diploma Plc has rallied. The supplier of specialized technical products and services reaffirmed guidance after reporting an improved profit for the year ended Sept. 30.

Marks and Spencer has also advanced after reports that U.S. investment firm Apollo Global Management is mulling a buyout of the U.K. retailer.

Wind turbine maker Vestas has shown a significant move to the downside after it was hit by a cyberattack.

U.S. Economic Reports

The National Association of Realtors is scheduled to release its report on existing home sales in the month of October at 10 am ET. Economists expect existing home sales to slump 1.4 percent to an annual rate of 6.20 million.

At 11:30 am ET, the Treasury Department is due to announce the results of this month’s auction of $58 billion worth of two-year notes.

The Treasury is also scheduled to announce the results of this month’s auction of $59 billion worth of five-year notes at 1 pm ET.

Stocks In Focus

Shares of Astra Space (ASTR) are soaring in pre-market trading after the launch vehicle company successfully completed its first commercial orbital launch for the U.S. Space Force late Friday night.

Cloud communications provider Vonage (VG) is also seeing substantial pre-market strength after agreeing to acquired by Ericsson (ERIC) for $6.2 billion in cash.

Meanwhile, shares of Rivian (RIVN) are likely to come under pressure following news the company and Ford (F) are halting plans to jointly develop an electric vehicle.
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