U.S. Stocks Pull Back Off Early Highs But Remain Positive

After an early move to the upside, stocks have given back ground over the course of the trading day on Friday but remain mostly positive. The advance on the day comes after the major averages came under pressure in the latter half of the previous session.

Currently, the major averages are off their highs of the session but holding on to gains. The Nasdaq is up 78.07 points or 0.6 percent at 13,599.51, the S&P 500 is up 14.06 points or 0.3 percent at 4,361.41 and the Dow is up 59.88 points or 0.2 percent at 33,951.82.

The early strength on Wall Street came amid a pullback by treasury yields, as a jump in yields contributed to Thursday’s pullback.

Yields surged in afternoon trading on Thursday following a disappointing thirty-year bond auction and remarks by Federal Reserve Chair Jerome Powell that renewed concerns about the outlook for interest rates.

Powell said the Fed is not yet confident rates are at a sufficiently restrictive level to bring inflation down to 2 percent and warned the central bank would not hesitate to resume raising rates.

Despite Powell’s comments, CME Group’s FedWatch Tool currently still suggests the Fed is likely to leave interest rates over the next several months before cutting rates in mid-2024.

However, treasury yields regained ground and stocks pulled back off their highs after the University of Michigan released a report showing a bigger than expected drop in consumer sentiment and an increase in inflation expectations.

The University of Michigan said its consumer sentiment index slid to 60.4 in November from 63.8 in October. Economists had expected the index to edge down to 63.7.

The consumer sentiment index decreased for the fourth consecutive month, falling to its lowest level since hitting 59.0 in May.

The report also said year-ahead inflation expectations rose to 4.4 percent in November from 4.2 percent in October, reaching the highest level since hitting 4.7 percent in April.

Long-run inflation expectations also increased from 3.0 percent in October to 3.2 percent in November, marking the highest reading since 2011.

Sector News

Semiconductor stocks are seeing significant strength on the day, with the Philadelphia Semiconductor Index climbing by 1.9 percent.

Notable strength is also visible among software stocks, as reflected by the 1.1 percent gain being posted by the Dow Jones U.S. Software Index.

On the other hand, gold stocks saw seeing considerable weakness, dragging the NYSE Arca Gold Bugs Index down by 1.6 percent to its lowest intraday level in a month.

The weakness among gold stocks comes as the price of gold for December delivery is tumbling $24 or 1.2 percent to $1,945.80 an ounce.

Biotechnology stocks have also come under pressure over the course of the session, resulting in a 1.6 percent drop by the NYSE Arca Biotechnology Index.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index dipped by 0.2 percent, while Hong Kong’s Hang Seng Index tumbled by 1.8 percent.

The major European markets have also shown significant moves to downside on the day. While the U.K.’s FTSE 100 Index has slumped by 1.8 percent, the French CAC 40 Index is down by 1.5 percent and the German DAX Index is down by 1.2 percent.

In the bond market, treasuries have pulled back off their early highs but remain in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.2 basis points at 4.598 percent.

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