Stocks eked out narrow gains Monday to build on last week's strong rally, with the Nasdaq Composite notching its longest positive streak since January.
"What we're seeing is the market pausing to digest that very strong rally last week," said Adam Sarhan, CEO of 50 Park Investments. "You're in a situation where the market's just pausing to consolidate the recent move and wait for the next bullish catalyst to come out, and that could likely be one of the Fed heads, Powell or earnings."
The Nasdaq Composite notched seven days of wins for the first time since January. The Dow and S&P 500 rose for sixth straight day for the first time since July and June, respectively.
Nvidia added about 1.7%, boosted by optimism from Bank of America ahead of its earnings report. Bumble shares slipped 4.4% after the dating app announced its CEO will step down in January. Shares of SolarEdge Technologies tumbled 5.1% on the back of a downgrade from Wells Fargo.
Yields also moved higher, reversing last week's trend, with the 10-year Treasury yield last up 9 basis points at about 4.653%.
Stocks are coming off their best week of 2023. The Dow notched its biggest weekly advance since October 2022, while the S&P and Nasdaq notched their best weeks since November 2022. A soft monthly jobs report also drove bond yields lower, giving a boost to equities.
"The stock market has had a strong start to November, and the move seems deserved in light of what we're seeing in most, though admittedly not all, of our sentiment indicators," wrote Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets.
"Generally, our view over the last month or so has been that if the surge in yields stopped soon, US equities could escape without incurring too much additional damage," she added.
This week ushers in a light period for economic data and company earnings, but seasonal tailwinds could help propel the recovery in stocks. November is the best-performing month for the S&P, according to the Stock Traders' Almanac. LPL Financial's Adam Turnquist noted that it also kicks off the best six-month return period for the market since 1950. The S&P has generated an average return of 7% from November through April since then, he said.
Earnings season is winding down, with more than 400 S&P companies having already reported quarterly financial results. Investors this week await updates from Walt Disney, Wynn, MGM Resorts and Occidental Petroleum.
Traders will also be watching Federal Reserve Chair Jerome Powell, who is scheduled to speak twice in the coming days. Last week, the central bank kept rates unchanged for a second straight meeting as bond yields tumbled. Investors are hoping the Fed's rate-hiking campaign may be nearing an end.
Stocks finish higher, Nasdaq notches longest streak since January
Don't expect the market rally to last, JPMorgan says
JPMorgan strategist Marko Kolanovic warned that the recent market rally, which featured last week the S&P 500's best weekly gain of 2023, will quickly reverse.
"We believe that equities will soon revert back to an unattractive risk-reward as the Fed is set to remain higher for longer, valuations are rich, earnings expectations remain too optimistic, pricing power is waning, profit margins are at risk and the slowdown in topline growth is set to continue," Kolanovic wrote.
"The bad news is good news zone may be quite narrow, as it is difficult to distinguish between a healthy slowdown and the initial stages of recession without the benefit of hindsight," he added. "With the market now pricing in a full ease by mid-2024, valuations rich and the increase in supply, we turn tactically short on 7Y USTs, after taking profit on longs in 5Y USTs, and look for a steeper curve at the long end."
— Fred Imbert
Cryptocurrencies rise after ether touches $1,900 for the first time since July
Bitcoin and ether were flat after their prices spiked over the weekend, with bitcoin again touching the $35,000 level while ether reached $1,900 for the first time since July – when the two were holding onto gains from the initial bitcoin ETF-fueled rally this year.
"Alts are playing catch up to bitcoin today," Ryan Rasmussen, analyst at Bitwise Asset Management, told CNBC. "Historically we've seen bitcoin rally, then ether, then alts – and that pattern seems to be repeating as this bull market heats up."
Graeme Moore, head of tokenization at Polymesh Network, added that traders are "front-running the next bull market as they've done in previous cycles where small, illiquid altcoins rise sharply. Due to this renewed confidence and interest, traders are also seeing opportunities that they weren't seeing before."
— Tanaya Macheel
Earnings tracking in line with expectations, Bank of America says
Investors shouldn't be worried about third-quarter earnings, according to Bank of America.
Earnings per share for the period are tracking for a 4% beat versus consensus, which would be in-line with the firm's forecast and double the typical beat rate, wrote equity and quant strategist Savita Subramanian in a Monday note.
"Excluding Energy, earnings are +10% [year over year]," she said. "Mega cap Tech was a big contributor, but even excluding the Magnificent 7, earnings beat by 3%."
— Samantha Subin
Winning streak for regional bank stocks at risk
Regional bank stocks cooled off on Monday after a strong rally last week.
The SPDR S&P Regional Banking ETF (KRE) was down 1.7% in afternoon trading. If that decline holds, it will snap a five-day losing streak for the fund. KRE rose 12% last week.
Banks report tightening lending standards, lower demand
Lending standards tightened while demand weakened, particularly for commercial and industrial loans, the Federal Reserve reported Monday in its quarterly Senior Loan Officer Opinion Survey.
"Over the third quarter, significant net shares of banks reported having tightened standards on C&I loans to firms of all sizes," the report stated, adding that a "significant" amount of banks reported lower demand.
Asked what kind of credit scores they were looking for these days, banks said they were less likely to extend credit for autos and credit cards to those in the 620-680 range and more likely for 720-plus.
Stocks making the biggest moves midday
Check out the companies making headlines in midday trading.
Hilton Grand Vacations — The stock declined roughly 7% after the lodging company said it would acquire Bluegreen Vacations for about $1.5 billion. Hilton Grand Vacations also posted its third-quarter results, posting revenue of $1.02 billion, down from $1.12 billion a year earlier. The company also trimmed its full-year guidance for adjusted earnings before interest, taxes, depreciation and amortization.
Paramount Global — The entertainment giant tumbled 8% following a rare double-downgrade from Bank of America. The firm moved its rating to underperform from buy, noting there aren't any significant opportunities to sell parts of the business on the horizon.
Bloomin' Brands – The restaurant operator saw shares dipped about 2% after Raymond James downgraded the stock to outperform from strong buy, citing weak traffic and rising beef cost pressures after Bloomin's third-quarter earnings release Friday.
— Hakyung Kim
Real estate stocks lag in S&P 500
Real estate stocks dragged on the S&P 500