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Stock Market News for Nov 14, 2022

U.S. stocks closed higher on Friday for the second straight session as optimism about peaking inflation continued from the day before. The energy sector drove the market with crude prices going up on China relaxing its COVID-19 measures. Market participants remained hopeful that the Fed would get less aggressive with the pace of its rate hikes. All three major indexes ended in positive territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) climbed 0.1% or 32.49 points to end at 33,747.86 points. Eighteen components of the 30-stock index ended in the positive territory, while 12 ended in the negative.

The S&P 500 rose 0.9% or 36.56 points to close at 3,992.93 points. Six of the 11 broad sectors of the benchmark index ended in positive territory. The Energy Select Sector SPDR (XLE), the Communication Services Select Sector SPDR (XLC) and the Consumer Discretionary Select Sector SPDR (XLY) gained 2.9%, 2.6% and 2.4%, respectively, while the Health Care Select Sector SPDR (XLV) lost 1.2%.

The tech-heavy Nasdaq rallied 1.9% or 209.18 points to finish at 11,323.33 points.

The fear-gauge CBOE Volatility Index (VIX) decreased 4.3% to 22.52. A total of 13.5 billion shares were traded on Friday, higher than the last 20-session average of 12 billion. Advancers outnumbered decliners on the S&P 500 by a 1.7-to-1 ratio.

Investors Hopeful About a Less Aggressive Fed

With the Consumer Price Index numbers showing inflation at lesser-than-expected levels, investors have re-validated hopes about the Fed easing its tight monetary policy from the December meeting onward. There is an increasing belief that next month’s meet would see the end of the long sequence of 75 bps hikes, and the Fed would opt for a 50 bps hike instead.

Comments coming in from various Fed officials after the inflation numbers emerged have also led credence to this belief. The general consensus is that inflation may have already peaked in June, and the Fed would start to go slow on its policy, eventually taking a pause sometime in early 2023.

The softer-than-expected inflation numbers are acting as a tailwind for the market and are expected to help stocks rally further. The yield on the U.S 10-year treasury note has fallen below 4% to echo the sentiment. These positive vibes coming in from the economic data led to a second straight session of gains.

China Lifts Stringent COVID Measures

Market participants were upbeat as China eased some of its COVID measures, including reducing two days of quarantine for those in close contact with the infected and inbound travelers and abolishing a penalty on airlines that bring in infected passengers.

Crude oil prices soared on the news, as China being one of the largest importers of oil in the world, could bring in supply-side pressure in the near term. WTI crude rose 2.9% on Friday to settle at $88.96/barrel, while Brent Crude settled up 1.1% to close at $95.95/barrel.

Energy became the biggest gaining sector of the day. Consequently, shares of Devon Energy Corporation DVN and ConocoPhillips COP surged 4.1% and 3.5%, respectively. Both have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

Preliminary numbers from the University of Michigan showed that consumer confidence had come in at 54.7 for November, much less than the consensus estimate of 59.4 for the period and the unrevised 59.9 for October.

Weekly Roundup

The three most widely followed indexes logged big gains last week. The S&P 500 and the tech-heavy Nasdaq advanced 5.9% and 8.1%, marking their biggest weekly gains since June and March, respectively. The Dow Jones Industrial Average rose 4.2%. The week’s gains were led by the latest CPI numbers, which showed that inflation and core inflation had grown less than expected year over year, and headline inflation had declined from its June peak. This, and the expectation of a less hawkish Fed as the economy showed signs of slowing down, tempered the buy-the-dip view.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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