Stocks Recover On Earnings, Consumer Confidence
2:44 pm Wednesday, December 21st, 2022
Today’s trade was decidedly positive thus far with the main indices all registering sizable gains. The upside bias is fueled by some speculative buying interest following large losses recently, along with the well-received earnings reports from Dow component Nike (NKE) and leading transport company FedEx (FDX). The response has triggered some renewed hope that the stock market could see a Santa Claus rally after all to end the year.
Nike is one of the best performers in the S&P 500 today and leads the Dow thanks to signs of strong demand and a contention that the worst of its inventory problems are behind it. FedEx, meanwhile, said demand trends softened further in its fiscal Q2, but pleased investors nonetheless with additional cost-cutting actions aimed at preserving profit margins.
Market participants also received some better-than-expected consumer confidence data for December, offering an added measure of support to the broad rally effort that has taken root. That report overshadowed a weaker than expected existing home sales report for November that was released at the same time.
The S&P 500 breached the 3,800 level yesterday, but rallied back above its 50-day moving average (3,877) today before pulling back somewhat. Currently, the S&P 500 is sticking to a narrow trading range right around that key technical level.
All 11 S&P 500 sectors sport decent gains today with the influential information technology (+1.7%) and consumer discretionary (+1.7%) sectors enjoying some of the biggest gains. Meanwhile, the consumer staples sector (+0.8%) shows the slimmest gain.
Mega cap stocks are a specific area of strength today. The Vanguard Mega Cap Growth ETF (MGK) is up 1.6% versus a 1.4% gain in the S&P 500 and the Invesco S&P 500 Equal Weight ETF (RSP).
Treasury yields have moved noticeably higher from overnight lows. The 2-yr note yield, at 4.19% earlier, sits at 4.22% now. The 10-yr note yield, at 3.62% earlier, sits at 3.69% now.
