US open: Stocks trade lower amid a sea of data points

by | Nov 24, 2021

Wall Street stocks were in the red early on Wednesday amid a sea of data points and rising rates.
As of 1525 GMT, the Dow Jones Industrial Average was down 0.25% at 35,724.21, while the S&P 500 was 0.21% weaker at 4,680.70 and the Nasdaq Composite came out the gate 0.27% softer at 15,732.92.

The Dow opened 89.59 points lower on Wednesday, taking a significant bite out of gains recorded in the previous session.

Before taking a break for Thanksgiving tomorrow, investors were digesting a plethora of data points on Wednesday.

The first cab off the rank was weekly US mortgage applications numbers, which grew 1.8% in the week ended 19 November following a 2.8% fall in the previous week. According to the Mortgage Bankers Association, its purchase index jumped 4.7% week-on-week and its refinancing one edged up 0.4% despite the average fixed 30-year mortgage rate increasing four basis points to 3.24%.

Next up, initial jobless claims dive-bombed in the week ended 20 November, according to the Labor Department, as first-time claims for unemployment totalled 199,000, a drop of 71,000 from the prior week to a seasonally adjusted print of 199,000, a number not seen since November 1969 and well and truly below median estimates for a reading of 260,000 applications. Continuing claims fell from 2.10m to 2.04m, while the four-week moving average dropped from 273,250 to 252,250.

On a different note, orders for goods made to last more than three years undershot forecasts last month amid a decline in orders for airplanes, both civilian and military. According to the Department of Commerce, in seasonally adjusted terms, durable goods orders slipped by 0.5% month-on-month to reach $260.1bn.

Elsewhere, America’s shortfall on trade with the rest of the world dropped sharply last month amid a jump in exports. According to the Department of Commerce, in seasonally adjusted terms, the US foreign trade deficit shrank at a month-on-month pace of 14.6% to reach $82.9bn. Exports increased by 10.8% on the month to reach $157.4bn, while imports increased by just 0.5% to hit $240.3bn.

Turning to US gross domestic product, growth in the US economy decelerated to a modest annual rate of 2.1% in the October-December quarter, according to the Commerce Department, slightly better than initially reported, with economists now predicting a strong rebound in the current quarter, assuming rising inflation and a recent uptick in Covid-19 cases don’t impact activity.

Still on data, Americans continued splashing out briskly last month with price gains continuing to accelerate alongside. According to the Department of Commerce, personal incomes increased by 0.5% month-on-month, beating economists’ forecasts for a rise of 0.3%. Personal consumption expenditures, meanwhile, jumped by 1.3% versus September. When adjusted for inflation, incomes were 0.3% lower, while spending was up by a more restrained 0.7%. The annual rate of increase in the PCE price index rose from 4.4% in September to 5.0% for October and from 3.7% to 4.1% at the core level.

Finally, new home sales edged up 0.4% month-on-month in October to a seasonally adjusted annual rate of 745,000, according to the Census Bureau, following a downwardly revised print of 742,000 in September and below expectations for a print to 800,000 and the University of Michigan’s final November consumer sentiment index for November fell to 67.4 in November, slightly above flash estimates for a print of 66.8 but well down from October’s reading of 71.7 and its weakest reading since 2011.

The Federal Reserve will also release minutes from its last meeting this afternoon.

Also in focus, the yield on the benchmark 10-year Treasury note continued to rise in early trade, currently sitting at around 1.674%, on the back of Joe Biden’s renomination of Jerome Powell as chairman of the Federal Reserve earlier in the week, while rising Covid-19 cases in Europe also continued to weigh on sentiment after news broke that German chancellor Angela Merkel was considering a full nationwide lockdown and mandatory vaccination.

In the corporate space, Gap shares slumped 22% after the retailer published third-quarter results that fell short of expectations due to product delays, while Tesla shares were also in the red after Elon Musk offloaded another $1.0bn in stock.

HP shares traded more than 11% higher after it beat on earnings on both the top and bottom lines and provided some higher first-quarter earnings guidance, while Deere & Co stated fourth-quarter profits had risen to beat estimates, with the group now predicted record profits despite dealing with striking workers.

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