Stocks lose momentum after Fed hopes surged

Stocks edged lower on Monday afternoon, losing momentum after logging their best week this year, even as hopes continued to prevail that the Federal Reserve is ready to call an end to tightening.

The tech-heavy Nasdaq Composite (^IXIC) shed about 0.1%, putting it on track to end a stretch of gains, while the benchmark S&P 500 (^GSPC) lost 0.14%. The Dow Jones Industrial Average (^DJI) decreased by 0.08% or 28 points.

The yield on the 10-year Treasury note (^TNX) ticked up about 9 basis points to trade near 4.65%.

The major US stock indexes soared on Friday after US jobs growth slowed more than expected and wage inflation cooled, cementing optimism for an end to Fed interest rate increases that persisted into the new week.

Investors will be listening out for confirmation when several Fed officials step up to speak this week, including two appearances by Chair Jerome Powell. Regional Fed Presidents John Williams and Raphael Bostic are among those on the docket.

Some on Wall Street have cautioned that the optimism could be overdone and to brace for volatility in stocks. Morgan Stanley strategist Mike Wilson warned last week’s stock comeback “looks more like a bear market rally rather than the start of a sustained upswing.”

Meanwhile, the market still has a stream of quarterly earnings ahead, while the calendar is quiet on the economic front. Disney’s (DIS) results due Wednesday are the highlight.

In commodities, oil prices jumped after top exporters Saudi Arabia and Russia confirmed last weekend that they will continue with their voluntary additional production cuts. West Texas Intermediate crude futures (CL=F), the US benchmark, rose more than 1% to just under $82 a barrel, while global benchmark Brent crude futures (BZ=F) put on a little less than 1% to trade under $86 a barrel.

As Wall Street’s momentum shifts, 74% of companies are beating last quarter’s earnings

Fresh off notching the best performing week of the year, Wall Street appears, at least monetarily, to be shaking off the pessimism that has gripped investors in recent months. While much of the shift in momentum stems from renewed hopes that the Federal Reserve is ready to call an end to tightening, corporate earnings continue to outperform last quarter, according to a new analysis by JPMorgan.

With almost 80% of S&P 500 companies already reporting, nearly three-quarters are beating 3Q earnings, that’s compared to an average of 68% over the last four quarters, the report said. And 58% of companies are beating revenue estimates. For companies that have posted earnings already, third quarter revenue growth has come in at 1.1% year over year, with net income growth at 2.6%

But the analysis that shows a largely robust picture coincides with other data on investor behavior that signals pessimism. At the end of last month, for instance, the equity strategy team at Bank of America Global published research showing that companies beating expectations weren’t seeing their stocks rewarded over the week following these reports. During this period of volatility companies that have revealed their latest results to investors were faring even worse.

This week, however, another 10% of S&P 500 companies representing 4% of market cap are scheduled to report, including Disney (DIS), Robinhood (HOOD) and eBay (EBAY). Market watchers will be keeping a close eye on whether boosted investor confidence will also reward the winners of the week.
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Stocks lose steam but still positive

Stocks lost some steam by mid-afternoon on Monday with all three major indices paring gains.

The tech-heavy Nasdaq Composite (^IXIC) continued to lead the session, up about 1.5%, while the benchmark S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) each traded flat. The yield on the 10-year Treasury note (^TNX) ticked up about 9 basis points to trade near 4.65%.
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Li Auto, Nvidia, Ryanair: Stocks trending in afternoon trading

Here are some of the stocks leading Yahoo Finance’s trending tickers page in afternoon trading on Monday:

Li Auto (LI): Shares of the Chinese EV maker surged more than 8% on Monday following reports the Chinese government may introduce more fiscal stimulus. The company reported record October delivery figures last week, telling investors it delivered 40,422 vehicles, an increase of more than 302% year-over-year.

Dish (DISH): The stock saw its worst decline in 23 years as shares dropped more than 20% on disappointing earnings. The company posted a surprise third-quarter loss as revenue sank 10% year-over-year to $3.7 billion. Dish CEO Erik Carlson also said he would step down.

Ryanair (RYAAY): Shares of the European budget airline rose about 5% after the company said it anticipates full-year earnings to reach a record high amid rising ticket prices. It also announced its first-ever dividend, saying it plans to pay out roughly $429 million in dividends next year.

Berkshire Hathaway (BRK-A, BRK-B): Shares of Warren Buffett’s Berkshire Hathaway ticked lower on Monday, down about 2%, after the conglomerate reported its first quarterly loss in a year. Still, operating earnings jumped by 40% while the firm’s cash reserves reached a record $157.2 billion.
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It might be time to ‘bargain hunt’ in small caps, strategist says

The Russell 2000 (^RUT) just had its best week in more than two years.

Beaten down areas of the market caught bids as investors increasingly bet on the Federal Reserve being done with its interest rate hike cycle. And even after a more than 7.5% surge in the index, RBC capital markets head of US equity strategy Lori Calvasina still sees opportunity as several traditional tailwinds for small caps take hold.

“They tend to lag late in economic cycles and so there’s really a sense when time’s get dicey that’s when you want to go bargain hunting in the small cap space in particular,” Calvasina told Yahoo Finance Live on Monday.

This could be crucial in the current economic moment. The most recent jobs report released on Friday, showed unemployment at its highest level in nearly two years. Data out last week showed the activity in the US services sector just hit a 5-month low. And while the economy has overall remained resilient, if the cracks many are seeing at the surface proliferate into a period of slower economic growth, small caps “tend to price in economic problems ahead of time,” Calvasina wrote in a research note out Monday.

Beyond the economic picture, other factors point to solid position for small caps per, Calvasina. For starters, markets are increasingly confident the Fed may be done done hiking rates, a known headwind for small caps. This comes as valuations on the index are looking increasingly attractive.

The Russell 2000 has been been this cheap compared to the S&P 500 since the tech bubble in the late 1990s into the early 2000s, per Calvasina.

“That’s causing some multi-asset investors to take notice,” she said.
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Disney reveals new CFO Hugh Johnston

Disney (DIS) finally has a new CFO.

The company announced Monday that longtime PepsiCo (PEP) executive Hugh Johnston will be the new senior executive vice president and chief financial officer of the media giant, effective Dec. 4.

Johnston has been at PepsiCo for 34 years where he held multiple leadership positions, including the CFO position, for more than a decade.

He was in that role when PepsiCo successfully fended off a campaign by activist investor Nelson Peltz to break up the company. Peltz is now pushing for multiple board seats at Disney, and the stock has hit record lows.

Disney shares traded flat following the announcement on Monday.

“Hugh’s well-earned reputation as one of the best CFOs in America and his wealth of leadership experience in both financial and operational roles overseeing a diverse portfolio of top global brands make him a perfect addition to Disney’s senior leadership team,” Iger said in a press release.

“His expertise will serve Disney and its shareholders well as we continue the transformative work we are doing to drive growth and value creation.”

Read more here.
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Stocks rise after logging best week this year

US stocks opened higher on Monday after logging their best week this year, buoyed by optimism that the Federal Reserve is done raising interest rates.

At the opening bell, the tech-heavy Nasdaq Composite (^IXIC) led the session, up 0.4%, while the benchmark S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) each climbed around 0.3%. The yield on the 10-year Treasury (^TNX) ticked up about 6 basis points to trade near 4.62%.
Tesla, BioNTech, and Dish Network: Stocks trending in premarket trading

Here are some of the stocks leading Yahoo Finance’s trending tickers page in premarket trading on Monday:

Tesla (TSLA): Shares rose over 1%. On Monday the EV maker said it plans to build a $26,838 car, which would be its cheapest, at its factory near Berlin.

BioNTech (BNTX)): BioNTech’s shares rose over 3%. The group cut its 2023 revenue target by about $1.1 billion due to lower demand for its COVID vaccine made with Pfizer.

Dish (DISH): Shares fell by over 6% on Monday. It reported revenue of $3.7 billion for the third quarter, versus $4.1 billion in the same period a year ago. Also, the group’s CEO, Erik Carlson, said he would step down.

Lyft (LYFT): Lyft shares rose. The ride-hailing company said price cuts have helped it gain market share from Uber.
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Stock futures tick higher as Fed hopes persist

The major US stock gauges were set to build on last week’s gains on Monday amid increased investor confidence that the Federal Reserve is done with rate hikes.

Futures on the Dow Jones Industrial Average (^DJI) were up 0.11%, or 37 points, while S&P 500 (^GSPC) futures added 0.20%. Contracts on the tech-heavy Nasdaq 100 (^NDX) put on 0.22%.