(Nov 24): US stocks advanced on Monday as tech stocks continued to recover from last week’s slump and traders geared up for a Thanksgiving week filled with data.
The S&P 500 Index climbed 1% at 10:05 a.m. in New York, further extending gains from Friday’s session. Meanwhile, the tech-heavy Nasdaq 100 Index rose 1.9%. The Cboe Volatility Index hovered at around 22. Bitcoin started the week on the back foot following a prolonged selloff that has put the token on track for its worst month since 2022.
November is on pace to break a streak of monthly gains for both the S&P 500 and Nasdaq 100. Concerns over stretched valuations, the sustainability of the artificial intelligence rally and the rate path of the Federal Reserve have pushed investors to adopt a risk-off approach.
However, this month’s pullback “paves the way for a market rebound and rally in December,” according to David Laut, chief investment officer at Kerux Financial. “Many of November’s fears about AI and a cratering job market have ended up not coming to fruition, which suggests that we are seeing a traditional market pullback in recent weeks and not the start of a deeper correction.”
Tech stocks struggled last week, even as Nvidia Corp delivered a surprisingly strong revenue forecast. But the sector started to bounce back on Friday and now appear poised looking to push the rally further.
In a note published on Monday, Wedbush Securities analyst Daniel Ives urged investors to remain calm about the tech selloff. Despite some “rough and brutal” days putting concerns over the tech bull market in the spotlight, Ives sees the selloff as a “short-lived mini panic moment” for the sector.
See also: Tech stocks lead as rate-cut bets keep rally alive
“The fact that there are so many market fears, including AI, the labour market and interest rates, suggests that the market is still climbing its wall of worry,” said Laut. That’s “a telltale sign that the overall bull market is intact and likely here to stay for the foreseeable future.”
Where to next?
With the Fed’s December meeting fast approaching, investors are seeking clues on the likelihood of another interest-rate cut. A round of economic data for September is set to be released following the end of the record-breaking government shutdown, meaning traders will be reliant on dated figures.
See also: US stocks rise as rate-cut hopes fuel gain before Thanksgiving
But investors received some hope for a cut as New York Fed President John Williams said Friday that he sees room for the central bank to lower interest rates again in the near term amid labor-market softness.
“There has been no effort by the Fed leadership to ‘clarify’ our interpretation of Williams’ comments Friday: they were likely approved by Powell and signal the leadership expects to push through a December rate cut,” Evercore ISI’s Krishna Guha and Marco Casiraghi wrote in a note published on Monday.
In terms of individual stocks, Morgan Stanley shares gained after being upgraded to outperform at Wolfe Research. Biogen Inc jumped after Novo Nordisk A/S said a pill version of Ozempic failed to slow the progression of Alzheimer’s disease. Performance Food Group Co fell after US Foods Holding Corp said it was no longer pursuing a combination with the company.
Uploaded by Magessan Varatharaja
