Stocks close higher Thursday
Stocks closed higher Thursday.
The Dow Jones Industrial Average gained 322.35 points, or 0.87%, to 37,404.35. The S&P 500 added 1.03% to 4,746.75. The Nasdaq Composite advanced 1.26% to 14,963.87.
— Sarah Min
Emerging market stocks and bonds are best of a bad bunch over next 7 years, GMO says
Emerging market stocks and bonds offer the greatest opportunity for capital appreciation and income over the next seven years, but they're the best of a bad bunch, according to Grantham Mayo Van Otterloo's latest forecasts of expected returns in major asset classes (excluding commodities).
As has been true since the the summer, GMO sees no major asset class surpassing the long-term average annual U.S. equity market return of 6.5% after inflation from now through 2030.
The firm, founded by noted value manager Jeremy Grantham in 1977, sees emerging market value stocks returning 6.3% per annum after inflation in local currency over the next seven years, up from 6.0% last August. Emerging market stocks are now forecast to return 4.7% per year, up from 4.0% a few months ago, trailed by international smallcap stocks at 4.4% (up from 3.6% last summer), emerging market debt at 4.4% (vs 3.4%), international large cap stocks at 2.3% (vs 1.6%), U.S. inflation-linked bonds at 2.0% (vs 0.9%), U.S. cash at 1.7% (vs 1.8%) and U.S. bonds at 1.9% (up from 1.1% previously).
GMO sees U.S. large cap stocks as the worst asset class with a likely real annual return of -2.6% (better than -3.0% expected last summer), followed by U.S. small-cap stocks at -1.2% (vs -2.4%) and hedged international bonds at 0.0% (vs -0.1%).
— Scott Schnipper
Stocks are higher into final hour of trading
Rerouting of ships around Red Sea unlikely to lift inflation, Capital Economics says
The rerouting of seaborne freight traffic around the Red Sea to avoid attacks by Houthi guerilla based in Yemen is unlikely to reverse the global progress made in fighting inflation, according to Simon MacAdam, senior global economist at Capital Economics in London.
"We expect the recent rise in oil prices to prove temporary, goods shortages should be avoided, and shipping costs do not look set to surge," MacAdam wrote Thursday. "Even if shipping disruption did cause a significant increase in firms' input costs, soft demand and replenished stocks have weakened their pricing power to pass them onto end consumers."
The production of commodities won't be affected by events in the Red Sea — which leads to and from the Suez Canal — nor from rerouting shipping around the Cape of Good Hope and southern Africa, Capital Economics said. "The materials will arrive, they will just take longer to get there."
— Scott Schnipper
The time for the 'Santa Clause Rally' starts Friday
Wall Street will see if a "Santa Clause Rally" — which refers to the gains typical of the final five trading days of the year, and the first two of the new year — will materialize this holiday season. This year, the season commences Friday until Jan. 3.
Since 1969, the S&P 500 on average has gained 1.3% during this period, according to the Jeff Hirsch, editor of the Stock Trader's Almanac. But the editor noted a failure of the Santa Clause Rally to materialize is historically a harbinger for poor stock performance.
"Failure to have a Santa Claus Rally tends to precede bear markets or times when stocks could be purchased at lower prices later in the year," Hirsch wrote in a blog post. "Down SCRs were followed by flat years in 1994, 2005 and 2015, two nasty bear markets in 2000 and 2008 and a mild bear that ended in February 2016."
"As Yale Hirsch's now famous line states, 'If Santa Claus should fail to call, bears may come to Broad and Wall,'" Hirsch added.
Yale Hirsch, who originated the term, was the founder of the Stock Trader's Almanac.
— Sarah Min
Current market breakout may be a 'bull trap,' UBS warns
UBS doesn't want investors to get their hopes up just yet.
Managing Partner Michael Riesner told clients Thursday that the current leg up in stocks may not indicate a broader rally ahead. Those tempered expectations stem from low volatility and yields hitting oversold levels. Divergences within the firm's indicator work are another reason for pause, he said.
"We still think that the current breakouts is the setup for a classic bull trap instead of believing in the start of a larger breakout campaign," he said.
Looking into the new year, Riesner anticipates a reversal and negative surprise in the first quarter. He expects the S&P 500 to trade at 4,280 — 8.9% lower than Wednesday's closing level — late in the quarter.
Riesner's forecast comes as stocks have rallied in the final trading month of an already-strong year.
— Alex Harring
Stocks making the biggest moves midday
Check out some of the companies making headlines in midday trading.
Spotify — The streaming music stock gained 2.7% after Pivotal Research upgraded Spotify to buy from hold. The Pivotal note said the firm sees a "renewed focus on financial discipline" and it anticipates Spotify will center more on generating free cash flow going forward.
Paramount Global, Warner Bros. Discovery — Shares of media conglomerates Paramount and Warner Bros. were 3% and 4% lower, respectively. A day earlier, CNBC reported that both companies were engaged in preliminary talks for a potential merger.
Cava — Shares of the restaurant chain gained about 2% after Wedbush upgraded the stock to outperform from neutral.
Read the full story here.
— Brian Evans
Salesforce is Dow's best performer
Salesforce was the best performer in the Dow Jones Industrial Average, up 2% in afternoon trading.
The move comes after Morgan Stanley upgraded the enterprise software company to overweight from equal weight, saying Salesforce is "building a bridge to generative AI" that will boost the stock next year.
Salesforce
— Sarah Min
Semiconductor stocks rise after strong Micron Technology earnings
Green energy stocks rise, solar ETF up over 4%
The Invesco Solar ETF (TAN) jumped more than 4% on Thursday morning, erasing its losses from Wednesday and putting the fund on track for its fifth positive day in seven.
The TAN ETF jumped on Thursday.
Solar stocks have been a struggling and volatile group in 2023, and TAN is still down about 27% year to date.
Among the fund's top holdings, SolarEdge was leading the way on Thursday with a gain of 5%.
— Jesse Pound
S&P 500 heads for longest weekly winning streak since 2017
The S&P 500 is poised to see another week of gains, extending its win streak to lengths not seen in around six years.
The broad index has added 0.3% this week, putting it on track to notch its eighth positive week in a row.
That would mark its longest weekly winning streak since 2017. During that year, the index climbed for eight straight weeks between September and November.
This rally has helped the benchmark rise near all-time high levels that are being closely watched by investors.
The S&P 500 this week
— Alex Harring
Individual investor optimism surges to 2.5-year high in latest AAII survey
Individual investors are the most bullish about the outlook for stocks over the next six months since April 2021, according to the latest weekly survey by the American Association of Individual Investors. That may raise red flags for contrarian investors who try and bet against the crowd rather than with it.
Optimism climbed to 52.9% of respondents in the latest week, up from 51.3% last week and an historical average of just 37.5%. As a result, bullishness remained above the historical average for a seventh consecutive week.
Even last week, when bullishness stood at levels last seen in July 2023, and before this latest uptick, AAII said that "optimism is now unusually high."
Pessimism about the outlook for stocks over the next six months rose slightly, to 20.9% from 19.3% last week, which had been a six-year low in bearishness. The historical average reading for pessimism is 31.0% and reached a one-year high as recently as early November, when bearishness touched 50.3% of those polled.
— Scott Schnipper
The S&P 500 rally is broad-based, health care outperforms
The S&P 500 rally was broad-based, with 466 names advancing in the broader index. CarMax was the top gainer, up more than 7% after the used vehicle retailer posted third-quarter earnings that topped expectations.
All 11 sectors were trading in positive territory. Health care stocks led gains, with the sector up 1% in midday trading. Illumina and DexCom were higher by more than 4%, each.
— Sarah Min
Carnival shares jump 6% after earnings beat
Shares of cruise operator Carnival jumped more than 6% after the company reported smaller-than-expected quarterly loss.
Carnival posted a loss of just 7 cents for the past quarter, compared to an estimate of a loss of 13 cents, according to LSEG. Revenue came in at $5.4 billion for the quarter, higher than the LSEG estimate of $5.3 billion.
The travel stock has rallied more than 137% this year.
— Yun Li
Stocks open higher Thursday
The Dow Jones Industrial Average climbed 229 points, or 0.58%. The S&P 500 added 0.72%, while the Nasdaq Composite advanced about 1%.
— Sarah Min
Investor Sarat Sethi shares his top sector for 2024
Investors may want to consider parking their money in healthcare stocks in 2024, according Sarat Sethi.
"There's a lot of opportunity in healthcare, whether it's in life science companies, medical products, and even big pharma — all out of favor at very reasonable valuations," the managing partner at Douglas C. Lane & Associates told CNBC's "Squawk Box" on Thursday.
He's also recommending that investors who benefitted from 2023's technology-driven rally consider taking profits and funneling that money into areas with secular growth and pricing power such as healthcare, commodities and energy.
— Samantha Subin
Stocks making the biggest premarket moves
Here are some of the names moving before the bell:
To see more stocks making premarket moves, read the full story here.
— Michelle Fox
Third-quarter real GDP comes in lower than expected
The third reading of real gross domestic product came in lower than expected.
Real gross domestic product rose at an annual rate of 4.9% in the third quarter, according to the third estimate from the Bureau of Economic Analysis. That's down from the second estimate's increase of 5.2%, and lower than the rise of 5.1% anticipated by economists polled by Dow Jones.
In the second quarter, real GDP rose by 2.1%.
— Sarah Min
Initial jobless claims come in below expectations
Initial jobless claims were little changed week over week and below Wall Street expectations, as the U.S. labor market continues to show strength.
There were 205,000 initial unemployment claims last week, up 2,000 from the previous period, according to the Department of Labor. Economists surveyed by Dow Jones were expecting 215,000 claims.
Continuing jobless claims came in at 1.87 million, which was also little changed from the prior period.
— Jesse Pound
CarMax shares jump after earnings
CarMax shares jumped 7% after the used vehicle retailer reported third-quarter earnings that topped expectations. The company posted earnings of 52 cents per share, above the earnings of 42 cents per share anticipated by analysts polled by FactSet. On the other hand, revenue of $6.15 billion fell short of the FactSet consensus estimate of $6.29 billion.
CarMax also resumed a share repurchase program in the third quarter.
CarMax
— Sarah Min
Profit-taking, economic worries or options trading? Analysts on sudden sell-off
Traders work on the floor of the New York Stock Exchange.
NYSE
Market strategists have shared several possible reasons behind Wall Street's sudden sell-off on Wednesday afternoon.
Some suggested it was as simple as investors taking profits after a nine-day bull run, in the absence of any discernible catalyst and with U.S. stocks widely seen as overbought.
Other market watchers pointed to a high volume of zero-day options trading as the death knell for the winning streak. These are risky put options, increasingly popular with retail traders, that expire on the same day they are traded.
Several strategists blamed the sell-off on a disappointing revenue outlook from delivery giant FedEx, often seen as a bellwether U.S. economic health, which missed expectations on both the top and bottom lines.
Russ Mould, investment director at AJ Bell, said the combination of FedEx earnings and a "general shift in market focus from when rates will be cut to the underlying health of the economy" had tempered investor optimism.
- Elliot Smith
Morgan Stanley upgrades Salesforce, cites 'bridge to better growth' in 2024
As Salesforce's data cloud offering gains traction, Morgan Stanley sees a "bridge to better growth" for the software company in 2024.
Analyst Keith Weiss upgraded shares to overweight, saying that while the ramp in generative AI-related apps may be more than 12 months a way, data cloud represents a "key foundational layer" in that long-term vision.
"Low investor expectations vs potential top-line upside drivers in price increases, product bundling and Data Cloud adoption frame an attractive risk/reward for CRM," Weiss said.
Salesforce gains on Morgan Stanley upgrade
The stock gained more than 2% before the bell. The firm hiked its price target, representing 34% upside from Wednesday's close.
Salesforce shares have rallied more than 96% in 2023. But according to Weiss, they still trade at a discount to its large cap software peers on a GAAP PEG basis. That gap should narrow as the company shows better-than-expected top and bottom line growth in the months ahead.
"Salesforce remains one of the best secularly positioned names within Software, as the global incumbent for front-office applications and a platform squarely addressing many of enterprises' top digital transformation needs," he wrote.
— Samantha Subin
European shares open in the red, tracking Wall Street losses
The pan-European Stoxx 600 was down 0.4% in early trade on Thursday, tracking global declines.
Autos dropped 1.2% to lead losses as all sectors and major bourses slid into negative territory.
Most Asia-Pacific markets fell overnight, led by Japan's Nikkei 225 and Topix indexes shedding 1.6% and 1%, respectively.
- Elliot Smith
South Korean shipping giant HMM tumbles after red-hot rally over last three days
Shares of South Korea's largest container shipping firm HMM plunged as much as 12.5%, leading losses on the country's benchmark Kospi index. The drop follows a three-day rally that saw the stock rocket by over 40%.
On Tuesday, a consortium made up of South Korean poultry processor Harim Group and private equity firm JKL Partners was chosen as the preferred bidder for HMM in a $4.9 billion deal.
However, Reuters reported that HMM said on the same day it had ordered its ships departing Europe — which would normally use the Suez Canal — to reroute via the Cape of Good Hope for an indefinite period of time, following a series of attacks on merchant ships.
HMM is among the top 10 largest container shipping firms globally, moving almost all of South Korea's exports.
— Lim Hui Jie
Toyota leads losses on Nikkei after safety issues with Daihatsu and airbags
Japanese automaker Toyota led losses on the benchmark Nikkei 225 index, falling as much as 4.87% Thursday.
This comes after Toyota announced to recall about one million vehicles on Thursday. The safety recall involved certain 2020-2022 Toyota and Lexus models in the United States.
This also comes after Toyota subsidiary Daihatsu halted shipments of all its vehicles on Wednesday, after an investigation found safety issues with its vehicles, including cases where airbag control units used in airbag tests for some models were different from the ones sold to the public.
The panel has been investigating Daihatsu after it said in April it had rigged side-collision safety tests carried out for 88,000 small cars, most of those sold as Toyotas.
— Lim Hui Jie
South Korea producer prices climb 0.6% in November — slowest rise in 4 months
Producer prices in South Korea climbed 0.6% year-on-year in November, its slowest rise in four months. PPI had risen 0.8% in October.
On a month-on-month basis, producer prices fell 0.4% in November, deepening from the 0.1% drop seen in the month before.
South Korea's producer price index measures monthly variations in the prices of goods shipped by industrial producers within the domestic market.
— Lim Hui Jie
Warner Bros. Discovery and Paramount slip amid reported merger talks
Warner Bros. Discovery and Paramount slid in extended trading as investors reacted to news of merger talks between the two media giants.
Shares of Warner Bros. Discovery slipped about 1.5%. Paramount shed around 0.7%.
Warner Bros. Discovery CEO David Zaslav and Paramount CEO Bob Bakish met Tuesday about a potential deal, sources told CNBC. The discussions are considered preliminary.
— Alex Harring, Alex Sherman, Mike Calia
Micron pops after earnings report
Micron advanced in after-hours trading on the back of a strong financial report and outlook.
Shares of the semiconductor manufacturer added more than 4%. The company posted a smaller loss per share than anticipated by analysts surveyed by LSEG for the first fiscal quarter. Meanwhile, its revenue came in above consensus forecasts.
The company also offered strong guidance for the current three-month financial period.
— Alex Harring
Stock futures are higher
Stock futures traded up shortly after 6 p.m. ET.
Futures tied to the Dow and S&P 500 each added about 0.1%, while Nasdaq 100 futures climbed by about 0.2%.
— Alex Harring
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Dow closes higher by more than 300 points, S&P 500 rebounds from worst day since September: Live updates - CNBC
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