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Optimism About Interest Rates Contributes To Uptick On Wall Street

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November 28 2023 11:47AM

Stocks fluctuated over the course of the trading session on Tuesday before eventually ending the day modestly higher. With the uptick on the day, the Dow reached its best closing level in well over three months.

The major averages finished the day well off their highs of the session but still in positive territory. The Dow crept up 83.51 points or 0.2 percent to 35,416.98, the Nasdaq rose 40.73 points or 0.3 percent to 14,281.76 and the S&P 500 inched up 4.46 points or 0.1 percent to 4,554.89.

Stocks moved to the upside in morning trading on the heels of remarks by Federal Reserve Governor Christopher Waller adding to recent optimism the Fed is done raising interest rates.

Speaking at an American Enterprise Institute event, Waller said he is “increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2 percent.”

Waller warned that he cannot say for sure whether the Fed has done enough to achieve price stability but expressed hope incoming economic data will help answer that question.

However, the buying interest generated by Waller’s remarks was partly offset by conflicting comments from Fed Governor Michelle W. Bowman.

Bowman said during a Utah Bankers Association and Salt Lake Chamber breakfast that she continues to expect the Fed we will need to increase rates further to keep policy sufficiently restrictive to bring inflation down to 2 percent in a timely way.

Overall trading activity remained subdued, however, with traders reluctant to make significant moves ahead of the release of several key economic reports in the coming days.

On Thursday, the Commerce Department is due to release its report on personal income and spending in the month of October.

The report includes readings on inflation said to be preferred by the Fed and could impact the outlook for interest rates.

The uptick by the Dow was partly due to a strong gain by shares of Boeing (BA), with the aerospace giant jumping by 1.4 percent to its best closing level in well over two months.

Being moved higher after RBC Capital Markets upgraded its rating on the Dow component’s stock to Outperform from Sector Perform.

Sector News

Gold stocks extended the rally seen during Monday’s session, driving the NYSE Arca Gold Bugs Index up by 4.5 percent to a nearly four-month closing high.

The rally by gold stocks came amid a sharp increase by the price of the precious metal, with gold for December delivery surging $27.60 to $2,040 ounce.

Significant strength also emerged among airline stocks, as reflected by the 1.3 percent gain posted by the NYSE Arca Airline Index. The index reached its best closing level in two months.

On the other hand, brokerage stocks showed a notable move to the downside, dragging the NYSE Arca Broker/Dealer Index down by 1.2 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index edged down by 0.1 percent and Hong Kong’s Hang Seng Index slumped by 1.0 percent, while South Korea’s Kospi jumped by 1.1 percent.

The major European markets also finished the day mixed. While the German DAX Index crept up by 0.2 percent, the U.K.’s FTSE 100 Index slipped by 0.1 percent and the French CAC 40 Index dipped by 0.2 percent.

In the bond market, treasuries extended the strong upward move seen over the course of the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell 5.3 basis points to a two-month closing low of 4.336 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to a revised reading on third quarter GDP as well as the Fed’s Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.

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