S&P 500 closes up slightly, traders digest earlier gains, Fed comments

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., November 15, 2023. REUTERS/Brendan McDermid Acquire Licensing Rights

Nov 17 (Reuters) – The S&P 500 index edged higher on Friday as investors digested recent gains while remarks from Federal Reserve officials clouded the outlook about when the U.S. central bank might start cutting interest rates.

Vice Chair for Supervision Michael Barr said he believes the Fed is at or near the peak of interest rate hikes, but San Francisco Fed chief Mary Daly and Boston Fed President Susan Collins highlighted the need for more evidence of cooling inflation.

Adding pressure, shares of Applied Materials (AMAT.O) fell after its third-quarter report and news the U.S. Justice Department is investigating allegations that the semiconductor equipment maker violated export curbs to China.

Offering some support was a decline in the 10-year Treasury note yield, which touched a two-month low during the session.

The S&P 500 (.SPX), the Nasdaq (.IXIC) and the Dow (.DJI) registered their third straight week of gains. For the S&P and the Dow it was the longest weekly winning streak since July. For the Nasdaq it would be the longest weekly advance since June.

“The biggest catalyst for stocks today is that we hit a two month low in Treasury yields,” said Robert Phipps, director at Per Stirling in Austin Texas.

Unofficially, the Dow Jones Industrial Average (.DJI) rose 2.14 points, or 0.01%, to 34,947.61, the S&P 500 (.SPX) gained 5.82 points, or 0.13%, to 4,514.06 and the Nasdaq Composite (.IXIC) added 11.81 points, or 0.08%, to 14,125.48.

“We’ve come a long way. We need to digest some of these moves and look for what the next catalyst is. Earnings is behind us. The Fed is on hold and is going to be in December. The equity market is looking for guidance,” said Jack McIntyre, portfolio manager at Brandywine Global in Philadelphia.

Looking for cues from the bond market, McIntyre expects November labor and inflation data as the next big catalyst.

While the major indexes had a muted session, Per Stirling’s Phipps pointed to strength in more cyclical sectors.

“Because it tech stocks are weak today the S&P 500 is hiding strength in other areas of the market,” he said, pointing to gains in energy (.SPNY), industrial (.SPLRCI) and financial (.SPSY) sectors.

Energy was the biggest percentage gainer among the 11 major S&P 500 sectors as oil prices settled up more than 4%.

The communication services index (.SPLRCL) lost ground as megacap Alphabet (GOOGL.O) shares declined along with Microsoft (MSFT.O).

Amazon.com (AMZN.O) gained ground. The online retailer announced it is trimming jobs at its Alexa voice assistant unit, citing shifting business priorities and a greater focus on generative artificial intelligence.

The small-cap Russell 2000 index (.RUT) rallied, outperforming broader markets.

Retailer stocks were in demand with Ross Stores (ROST.O) rallying after the company, which sells off-price clothing and home products, raised its annual earnings forecast after topping third-quarter sales and profit expectations.

Gap (GPS.N) shares surged as the apparel retailer posted better-than-expected third-quarter results due to improving sales at Old Navy and easing supply expenses.

ChargePoint Holdings (CHPT.N) shares slumped as the electric-vehicle charging network provider lowered estimates for third-quarter revenue. It also named Rick Wilmer CEO.

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