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Stock Market News for Dec 1, 2022

Wall Street witnessed an impressive rally following dovish comments from the Fed Chairman. Earlier the market was trading in negative territory as investors were assessing as series of mixed economic data. All the three major stock indexes ended in positive zone. For the month as a whole, these indexes finished in green too.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) surged 2.2% or 737.24 points to close at 34,589.77. Notably, 28 components of the 30-stock index ended in positive territory while 2 in negative zone. The blue-chip index technically exited the bear territory after closing more than 205 higher over its recent low posted on Sep 30.

The tech-heavy Nasdaq Composite finished at 11,468, jumping 4.4% or 484.22 points due to strong performance of large-cap technology stocks. Netflix Inc. NFLX, an important component of the tech-laden index, advanced 8.8%. Netflix currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The S&P 500 climbed 3.1% or 122.48 points to end at 4,080.11. All 11 broad sectors of the benchmark index closed in positive territory. The Technology Select Sector SPDR (XLK), the Communication Services Select Sector SPDR (XLC) and the Consumer Discretionary Select Sector SPDR (XLY) appreciated 5%, 4.2% and 3.5%, respectively.

The fear-gauge CBOE Volatility Index (VIX) was down 6% to 20.58. A total of 15 billion shares were traded on Wednesday, lower than the last 20-session average of 11.1 billion. The S&P 500 posted 24 new 52-week highs and one new 52-week lows. The Nasdaq Composite registered 117 new 52-week highs and 167 new 52-week lows.

Powell Sounds Dovish

Federal Reserve Chairman Jerome Powell indicated that the magnitude of the interest rate hike is likely to be reduced from December FOMC. On Nov 30, Fed Chairman Jerome Powell delivered lecture at the Hutchins Center of the Brookings Institution on monetary and fiscal policies. However, he also mentioned that the central bank has to go a long way to contain inflation to its targeted level.

Powell said, “It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting.”

At the same time, Powell also remarked that the monetary policy will remain restrictive until the inflation rate declines considerably. “Despite some promising developments, we have a long way to go in restoring price stability,”  the Fed Chairman said.

Economic Data

The Bureau of Economic Affairs reported that the U.S. GDP for third-quarter 2022 grew by 2.9%, up from 2.6% reported in the first estimate. The consensus estimate was 2.8%. This shows the resilience of the U.S. economy after GDP contracted in the first two quarters of this year.

Corporate profits decreased by 31.6 billion in third-quarter 2022 compared with a massive increase of 131.6 billion in the second quarter. Current production  cash flow increased by 5.2 billion in third-quarter 2022 compared with $4.1 billion in the previous quarter.

The ADP reported that the U.S. private sector added 127,000 jobs in November, well below the consensus estimate of 190,000. The Department of Labor reported that job openings fell to 10.3 million in October from 10.7 million in November. Despite the decline, job openings per unemployed worker stayed at 1.7, well above the pre-pandemic level of 1.2.

The National Association of REALTORS reported pending home sales declined by 4.6% to a reading of 77.1 in October. The consensus estimate was for a drop of 5.5%. September’s drop was revised downward to 8.7% from 10.25 reported earlier. October marked the fifth consecutive month of decline for the metric.

The Department of Commerce reported that trade deficit in goods increased to $99 billion from $91.9 billion in September.

Monthly Roundup

U.S. stock markets have completed a fabulous November. The Dow, the S&P 500 and the Nasdaq Composite have rallied 5.3%, 4.6% and 3.3%, respectively. Slowing inflation rate has bolstered market participants confidence on risky assets like equities. This has strengthened the rally that started from mid-October.

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