Stocks End Mixed After Recent Volatility
2:38 pm Friday, November 18th, 2022
The stock market started this options expiration day with some modest strength. The market showed nice resilience yesterday, recovering from larger losses, which boosted investor sentiment along with some better-than-expected earnings reports from the retail and technology spaces.
Earnings-driven gains in Ross Stores (ROST), Foot Locker (FL), Gap (GPS), Applied Materials (AMAT), and Palo Alto Networks (PANW) helped fuel the opening gains. The upside momentum lost steam, however, following a report of the ninth straight monthly decline in existing home sales and a dour-looking 0.8% month-over-month decline in the Leading Economic Index that marked the eight straight monthly decline for that series.
Despite the loss of momentum, the main indices were able to hold onto modest gains until Treasury yields started creeping higher and the dollar built up some strength. The U.S. Dollar Index is up 0.2% to 106.89. The 10-yr note yield is up four basis points to 3.81% and the 2-yr note yield is up three basis points to 4.49%.
Lagging mega cap stocks also contributed to the move lower that brought the S&P 500 and Nasdaq into the red. The Vanguard Mega Cap Growth ETF (MGK) is down 0.8% versus a 0.2% loss in the S&P 500.
Market participants are also still dealing with concerns over an economic slowdown, which has weighed on sentiment in recent sessions. This point is reflected in the sharp turn lower for oil prices. WTI crude oil futures are down 3.1% to $78.89/bbl.
Comments from Boston Fed President Collins (2022 FOMC voter) piled onto the existing worries about an economic slowdown. She said in a CNBC interview that the Fed is not done raising rates and that a 75 basis point rate hike in December is still on the table.
Roughly half of the 11 S&P 500 sectors trade in positive territory. Utilities (+1.3%) and health care (+0.8%) lead the outperformers while energy (-1.7%) and consumer discretionary (-0.9%) suffer the steepest losses.
