U.S. stock markets closed mixed on Monday to start the Thanksgiving week. All three major stock indexes jumped in early hours of trading following the news of Jerome Powell’s renomination as Fed Chairman. However, indexes gave up their gains in last hour after a spike in government bond yields fearing heightened inflation. The S&P 500 and the Nasdaq Composite ended in red while the Dow managed to stay in green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.1% to close at 35,619.25, reversing its three-day losing streak. Notably, 20 components of the 30-stock index ended in the green while 10 in red.
However, the S&P 500 fell 0.3% to end at 4,682.94. In intraday trading, the index recorded a fresh all-time high of 4,743.83. Six out of eleven sectors of the benchmark index closed in positive territory and five in red.
The Energy Select Sector SPDR (XLE) and the Financials Select Sector SPDR (XLF) gained 1.8% and 1.4%, respectively. In contrast, the Communication Services Select Sector SPDR (XLC) and the Technology Select Sector SPDR (XLK) tanked 1.2% and 1.1%, respectively.
Meanwhile, the tech-heavy Nasdaq Composite finished at 15,854.76, dropping 1.3% or 202.68 points due to weak performance by large-cap technology stocks. In intraday trading, the index recorded a fresh all-time high of 16,212.23.
The fear-gauge CBOE Volatility Index (VIX) was up 7% to 19.17. A total of 11.6 billion shares were traded on Monday, lower than the last 20-session average of 11.1 billion. Decliners outnumbered advancers on the NYSE by a 1.28-to-1 ratio. On Nasdaq, a 1.76-to-1 ratio favored declining issues.
President Biden Renominates Jerome Powell as Fed Chair
President Joe Biden has nominated incumbent Fed Chairman Jerome Powell for the second term. Former President Donald Trump nominated Powell as Fed Chair in 2017. His second term will expire on 2025. Powell is known for his relative dovish stand on monetary policies and a key player to finetune balancing acts between aggressive and accommodative monetary stances.
Powell is highly appreciated by market participants for his timely intervention by reducing the Fed funds rate to nearly zero level and initiating a massive $120 billion per month of bond-buy program in order to maintain sufficient liquidity in the economy to cope with the pandemic-led unprecedented economic devastations. Investors welcomed Powell’s renomination as the U.S. economy is currently suffering from mounting inflationary pressure while the pandemic is still continuing.
Spike in Government Bond Yields
As Investors shifted funds from safe-haven bonds to risky assets like equities, prices of government bonds fell. Consequently, the yield on the benchmark 10-year U.S. Treasury note increased 9.3 basis points to 1.629% in afternoon trading while the yield on the 30-year U.S. Treasury bond rose 6.4 basis points to 1.971%.
As a result, shares of major banks like The Goldman Sachs Group Inc. GS and JPMorgan Chase & Co. JPM were up 2.3% and 2.1%, respectively. However, shares of technology giants like Alphabet Inc. GOOGL and Meta Platforms Inc. FB fell 1.8% and 1.2%, respectively. Alphabet sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
House Clears Social Spending Bill
On Nov 19, the House of Representatives passes a massive $1.7 trillion social safety net and climate bill proposed by the Biden administration. The bill will now head for Senate where it is expected to face tough challenges from Republican Senators.
The National Association of Realtors reported that existing home sales in October rose 0.8% to a seasonally adjusted annualized rate of 6.34 million units, outpacing the consensus estimate of 6.19 million units and September’s data of 6.29 million units. However, year over year, existing home sales drop 5.8%.
Zacks’ Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create “the world’s first trillionaires.” Zacks’ urgent special report reveals 3 AI picks investors need to know about today.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report