Because of November's comeback, the major market benchmarks are approaching their 2023 highs reached over the summer. To reach a new closing high for 2023, the Dow would need to gain about 0.5%. The S&P 500 is about 0.8% from a closing high for the year, while the Nasdaq is roughly 0.7% away.
On Wednesday, General Motors shares popped about 9.4% after the company announced a $10 billion buyback and raised its dividend, and NetApp soared 14.6% on an earnings beat. Phillips 66′s stock jumped 3.6% after Elliott Investment Management took a $1 billion stake in the energy company.
The yield on the 10-year Treasury note fell below 4.3% for the first time since September, lending support to stock valuations.
Data released Wednesday showed gross domestic product in the third quarter grew at a stronger-than-forecast annual rate of 5.2%. The boost came primarily from revisions to government spending and investments in nonresidential structures.
"We probably need to digest gains and I would not be surprised if that occurs in the early part of December, which historically we tend to see," Sam Stovall, chief investment strategist at CFRA Research, said.
"But at the same time, December is, historically, the best month of the year in terms of a batting average, meaning frequency of advance," he added. "So I wouldn't be surprised that we continue to have a positive move in the markets between now and the end of the year."
According to Adam Turnquist, chief technical strategist at LPL Financial, the S&P 500 could reach 4,600 by the end of this year.
"Our market right now is just looking at the longer term trend in inflation and obviously it's coming down — the Fed is acknowledging that. I think the scope for a Santa Claus rally is growing," he said. "We're not extremely overbought. I think there's more room for participation in the rally."
Traders have been optimistic that the Fed's rate-hiking cycle is over, with fed funds futures pricing reflecting a chance the central bank could cut rates as early as next spring. However, Richmond Fed President Thomas Barkin said Wednesday that policymakers could keep rate increases on the table if inflation doesn't continue to slow.
The major averages remain on track for strong monthly gains. The S&P 500 and Dow are up 8.5% and 7.2%, respectively, in November. The Nasdaq has climbed about 10.9% over the same period.
Stocks end Wednesday mixed
Lower rates have boosted equity inflows, Barclays says
Lower interest rates in November have increased demand for long-duration assets, particularly growth stocks in technology and cyclicals, according to Barclays analyst Emmanuel Cau.
Equities have seen significant inflows this month, surging to their highest levels since March 2022, Cau said. Both long-only and retail investors were behind the increase in short covering and in real money buying of equities, he noted.
"Rally looks exhausted, but overall equity exposure is only about neutral and cash holdings are high. Although a soft landing feels consensus, poor [mutual fund] returns in Nov suggest positioning is defensive and pain trade remains to the upside into '24." Cau wrote in a Wednesday note. "Aggregate equity positioning, though, still looks marginally below neutral, with discretionary investors holding lower equity exposure compared with systematic peers."
— Pia Singh
Top investor remembers Charlie Munger's impact: 'He was a true contrarian'
Charlie Munger, the late Berkshire legend who was Warren Buffett's right-hand man, had a transformative influence on a generation of value investors, said John Rogers, co-chief executive at Ariel Investments.
"I loved his irreverence," Rogers said Wednesday at CNBC CFO Council Summit. "The way that he would, you know, he was a true contrarian. He didn't care what others thought. And I think to be a successful investor, that's critical, that you don't follow the crowd. You think independently, and he was someone who truly did that."
Rogers said the lessons Munger and Warren Buffett imparted on the importance of placing concentrated, long-term bets in industries investors can understand were "impactful" influences for managers.
"They've transformed so many lives," Rogers said. "The ways that they taught investors to think about the markets and, of course, the emphasis on long term investing that he and Warren believed in."
— Sarah Min
General Motors heads for best session since 2020
Shares climbed 10.2% at one point in afternoon trading, before climbing back down to around 9%. If the stock closes above 9.8%, it would mark the best session since March 24, 2020, when shares finished 19.9% higher.
GM initiated a $10 billion stock buyback, while also sharing plans to increase its quarterly dividend by 33% to 12 cents per share. The company also reinstated its 2023 guidance, which included an impact from the United Auto Workers strike.
— Alex Harring, Michael Wayland
Oil gains momentum ahead of OPEC meeting
Oil prices settled more than 1% higher on Wednesday as futures contracts gain momentum ahead of key OPEC meeting tomorrow.
The West Texas Intermediate crude contract for January rose $1.45, or 1.9%, to settle at $77.86 a barrel, while the Brent crude contract for January rose $1.42, or 1.74%, to settle at $83.10 a barrel.
Oil has rallied about 4% since Monday's close.
OPEC and its allies, OPEC+, are set to hold a virtual meeting tomorrow on production cuts. Sources told Reuters that deeper cuts as well as rolling over current cuts are both on the table.
Meanwhile, a storm on the Black Sea has disrupted oil production in Kazakhstan. The Central Asian nation's three largest oilfields slashed production by more than 50% due to the storms.
The storms disrupted loadings at the Caspian Pipeline Consortium terminal that Kazakhstan uses to export.
-- Spencer Kimball
Bill Ackman says Fed rate cuts could come sooner than expected
Pershing Square's Bill Ackman said the Federal Reserve could start cutting rates as soon as the first quarter of 2024, according to Bloomberg's David Rubenstein Show: Peer-to-Peer Conversations.
"We're betting that the Federal Reserve is going to have to cut rates more quickly than people expect," Ackman said in an upcoming episode of the show. "That's the current macro bet that we have on."
Market pricing projects a 78% chance that the Fed will start cutting in May and lop a full percentage off the fed funds rate by the end of 2024, according to the CME Group's FedWatch gauge.
The hedge fund manager revealed last month that he covered his bet against long-term Treasurys, believing that investors may increasingly buy bonds as a safe haven because of growing geopolitical risks.
— Yun Li
Fed's Beige Book sees slowing activity, easing price increases
Economic activity has slowed broadly over the past six weeks, while labor demand also has backed off and price increases have eased, the Federal Reserve reported Wednesday in its periodic "Beige Book" summary.
The report showed that consumers showed more "price sensitivity." In the jobs market, firms reported an easier time finding labor and were more comfortable laying off underperformers.
On inflation, the report said prices for construction materials declined, though utilities and insurance costs rose. In general, the report saw businesses saying they see "moderate" price increase continuing into 2024.
Schwab stock jumps more than 6%
Brokerage firm Charles Schwab jumped more than 6% on Wednesday and was on pace for its best day since July 18, when it gained more than 18%.
The pop comes after a positive note on the stock from Piper Sandler, which said Charles Schwab could be a beneficiary of potential rate cuts from the Federal Reserve in 2024.
Schwab was among the financial stocks that fell sharply earlier this year around the time Silicon Valley Bank failed. The stock is still down 28% year to date.
— Jesse Pound
Energy stocks lag in S&P 500 this month
Energy stocks in the S&P 500 are on pace to end November down, bucking the broad index's ascent.
The sector is on track to finish November down 1.8%, making it the only of the 11 that comprise the S&P 500 poised to end lower. (Thursday's close marks the conclusion of the trading month.)
By comparison, consumer staples was the next worst performing S&P 500 sector in November, but was still more than 3% higher. As a whole, the S&P 500 is slated to close the month up by 8.9%.
APA Corporation and Marathon Oil dragged on the sector during the month so far, posting slides of more than 8% and 7%, respectively. EQT and Schlumberger were the next biggest laggards, dropping more than 6% each.