S&P 500 Index Overview
The S&P 500 Index saw significant gains today, with the Dow Jones Industrial Average rising by 1.74% and the Nasdaq 100 Index increasing by 2.09%. Additionally, December E-mini S&P futures rose by 1.75%, while December E-mini Nasdaq futures climbed by 2.14%.
U.S. stock indices surged following Nvidia’s positive earnings outlook, which alleviated concerns about potential overvaluation and a bubble in the artificial intelligence sector. Nvidia’s stock increased more than 4%, boosting semiconductor stocks and AI-related equities, and generally encouraging more risk-taking in the market.
The upward trend continued throughout the day, particularly as bond yields fell significantly after non-farm payrolls for September rose more than expected. However, the unemployment rate surprisingly spiked to a four-year high, suggesting that the Federal Reserve might maintain a favorable stance on interest rates in its upcoming meeting. Consequently, the likelihood of a rate cut in December increased to 35% from 25% earlier this week.
New jobless claims in the U.S. dropped by 8,000 to 220,000, outpacing expectations. Still, ongoing claims rose to 1.974 million, the highest figure in four years, hinting at ongoing challenges for the unemployed. Non-farm payrolls for September rose by 119,000, surpassing the forecast of 51,000, indicating a robust labor market. Yet, the unemployment rate edged up to 4.4%, slightly above the expected 4.3%.
In September, average hourly wages remained unchanged year-on-year at 3.8%, exceeding the predicted figure of 3.7%.
The Philadelphia Fed’s economic outlook for November decreased to -1.7, below the expected 1.0. Meanwhile, Cleveland Fed President Beth Hammack’s hawkish remarks added pressure on stocks, suggesting that lowering interest rates could exacerbate inflation and stimulate riskier behavior in financial markets.
This week is packed with economic reports, including real earnings, the S&P US Manufacturing and Services PMI, the University of Michigan’s Consumer Confidence Index, and the Kansas City Fed’s Services Activity Report. Notably, the U.S. Bureau of Labor Statistics has decided to withhold October employment statistics, combining them into the November report set for December 16th. Additional delayed economic data is also expected soon, though specific release times are not finalized.
The market is currently pricing in a 35% chance of a 25 basis point rate cut at the next FOMC meeting on December 9-10.
As the third-quarter earnings season wraps up, 460 of the S&P 500 companies have reported, with 82% surpassing expectations, marking the best performance since 2021. Profits rose by 14.6% this quarter, significantly exceeding last year’s estimate of 7.2%.
International markets show mixed results today, with Euro Stoxx50 rising by 1.25%. Meanwhile, the Shanghai Composite dipped by 0.40%, and Japan’s Nikkei soared by 2.65%.
In U.S. bonds, the December 10-year T-note saw a small uptick, and the yield fell to 4.110%. This reaction stemmed from the stronger-than-expected non-farm payrolls, yet the surprising increase in unemployment also hinted at potential interest rate cuts from the Federal Reserve. Easing inflation expectations supported T-note gains, as the 10-year breakeven inflation rate fell to a month-low of 2.267%.
European bond yields were mixed; German Bund yields rose to 2.742%, while UK bond yields fell slightly after reaching a five-week high.
Germany’s PPI for October decreased by 1.8% year-on-year, slightly undercutting predictions.
Comments from the ECB’s Makhlouf suggested that eurozone interest rates are well-positioned, and that substantial evidence would be necessary before considering changes.
Currently, market swaps are pricing in a lower chance of a rate cut at the ECB meeting scheduled for December 18th.
Nvidia led the technology sector by increasing over 4% after reporting third-quarter revenues of $57.01 billion, surpassing analysts’ expectations, and projecting Q4 revenue of around $65 billion. Tesla and Alphabet also performed well, each rising over 4% and 3%, respectively. Other tech giants, like Meta and Apple, enjoyed gains of over 2%, while Amazon and Microsoft rose more than 1%.
As Nvidia’s strong earnings buoyed the market, semiconductor stocks like Palantir and Broadcom jumped more than 4%, with other companies including AMD and Marvell seeing over 3% increases.
PACS Group experienced a remarkable 56% rise following its audit report and an increase in sales. Walmart outperformed, rising more than 5% after raising its sales forecast for 2026.
Regeneron Pharmaceuticals rose over 4% after gaining FDA approval for EYLEA HD, a new injectable treatment. ZIM Integrated Shipping Services reported Q3 sales of $1.78 billion, topping expectations.
Nasdaq rose over 3% due to an upgrade from Morgan Stanley, while Jack Henry & Associates climbed more than 2%. Conversely, Bath & Body Works endured a significant drop of over 24% after missing sales expectations and lowering its earnings forecasts.
Jacobs Solutions was among the biggest decliners of the S&P 500, falling more than 4% after reporting third-quarter revenues below estimates. Data Dog also slipped more than 3% due to competitive concerns following recent acquisitions in the sector. Abbott Laboratories also experienced a slight decline after its $21 billion acquisition of Exact Sciences.
