Stocks Edge Higher, Nasdaq Extends Winning Streak
In the wake of last week’s robust rally, stocks managed to eke out modest gains on Monday, with the Nasdaq Composite securing its lengthiest streak of positivity since January.
The Nasdaq exhibited notable strength, surging by 0.3% to reach a closing figure of 13,518.78. Simultaneously, the S&P 500 inched up by 0.18%, wrapping up the trading day at 4,365.98. The Dow Jones Industrial Average contributed to the momentum, edging up by 0.1% as it settled at 34,095.86.
The market appears to be taking a momentary pause to assimilate the significant rally experienced last week. This consolidation phase is in anticipation of the next bullish catalyst, which could well be linked to the actions or statements of Federal Reserve decision-makers, particularly Jerome Powell, or the impending earnings season.
For the Nasdaq Composite, this marks a remarkable achievement, as it secured seven consecutive days of gains for the first time since January. On the other hand, the Dow and S&P 500 sustained upward momentum, extending their winning streaks to six days, a feat not seen since July and June, respectively.
Nvidia, the renowned semiconductor company, saw a lift of approximately 1.7%, bolstered by optimistic sentiment from Bank of America in the lead-up to its earnings report. However, Bumble, the popular dating app, witnessed a decline of 4.4% after announcing that its CEO would step down in January. Another notable move was observed in the shares of SolarEdge Technologies, which tumbled by 5.1% following a downgrade from Wells Fargo.
In the realm of bond yields, there was an observable shift. This reversal of last week’s trend saw the 10-year Treasury yield advancing by 9 basis points, reaching approximately 4.653%.
The stock market is riding the coattails of its most impressive week in 2023. The Dow recorded its most substantial weekly gain since October 2022, while the S&P and Nasdaq enjoyed their most favorable weeks since November 2022. This bullish trajectory was further fueled by a softer monthly jobs report, which subsequently led to a decrease in bond yields and provided a boost to equities.
November has ushered in a robust start for the stock market, and the current movements align with the prevailing sentiment indicators, albeit with some exceptions.
Over the past month, a prevailing perspective has emerged, suggesting that if the surge in bond yields abates in the near term, US equities may navigate through the situation without incurring substantial additional damage.
As we enter the week, there’s a lighter schedule for both economic data and corporate earnings. However, seasonal factors could offer a tailwind for the recovery in stock prices. Historically, November stands as the best-performing month for the S&P, according to the Stock Traders’ Almanac. Additionally, LPL Financial’s Adam Turnquist noted that November marks the commencement of the most favorable six-month return period for the market since 1950, with the S&P having generated an average return of 7% from November through April.
While the earnings season is winding down, investors eagerly await updates from companies such as Walt Disney, Wynn, MGM Resorts, and Occidental Petroleum.
The spotlight will also be on Federal Reserve Chair Jerome Powell, who is scheduled to deliver two speeches in the coming days. Following the central bank’s decision to keep rates unchanged during the past week, amidst falling bond yields, investors are increasingly hopeful that the Fed’s rate-hiking campaign may be approaching its conclusion.
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