Market Overview: Stock Rally Pauses as Treasury Yields Rise, Wall Street Eyes CPI Data

This week, Wall Street opened with a cautious stance as stock gains took a breather, with the market’s focus turning to crucial upcoming economic indicators. The S&P 500 experienced a slight decline after a notably strong performance, where it saw gains on nine out of the past ten days—a rare occurrence that hasn’t been seen since fall 2021.

In the bond market, Treasury yields saw an uptick, with the 10-year note nearing 4.7%. The U.S. dollar gained against most major currencies in developed markets. This shift comes as November witnessed a stock market rally, fueled by expectations that interest rate hikes might be reaching their peak, and a potential easing of policies by the Federal Reserve in the coming year.

Investor sentiment has also shown a significant shift. According to a survey by the American Association of Individual Investors, optimism has surged, while pessimism has decreased dramatically. The bull-bear spread has seen its most significant rise since early 2009. Additionally, Wall Street is closely monitoring discussions in Washington to prevent a potential government shutdown at the week’s end, which could impact the U.S.’s credit rating.

Despite concerns about a possible economic slowdown, the latest Bloomberg Markets Live Pulse survey indicates a strong bullish stance on risky debt among market participants. Corporate earnings reports this week, especially from major retailers like Walmart Inc. (WMT) and Target Corp. (TGT), will offer insights into consumer spending trends, particularly in the lead-up to the holiday season.

The housing market is also facing challenges, with high mortgage rates and soaring home prices potentially slowing down the home-improvement spending surge that benefited companies like Home Depot Inc. (HD) and Lowe’s Cos. (LOW) during the pandemic.

In corporate news, Boeing Co.(BA) made headlines at the Dubai Airshow with significant orders, including a $52 billion deal with Emirates Airline. Tyson Foods Inc. (TSN) is grappling with various economic pressures, while HP Inc. (HPQ) received a positive outlook from Citigroup Inc. Novo Nordisk A/S’s (NVO) Wegovy drug showed promising results in a heart disease study, and Exxon Mobil Corp.(XOM) is venturing into lithium production.

On the debt market front, there’s a cautious atmosphere following Moody’s recent negative outlook for the U.S., but new investment-grade bond sales are expected to continue, albeit at a slower pace.

Market Movements Snapshot:

• Stocks: S&P 500 down 0.3%; Nasdaq 100 down 0.4%; Dow Jones down 0.2%; Stoxx Europe 600 up 0.5%; MSCI World index stable.
• Currencies: Bloomberg Dollar Index stable; Euro at $1.0677; Pound up 0.1%; Yen down 0.2%.
• Cryptocurrencies: Bitcoin down 0.9%; Ether up 0.5%.
• Bonds: 10-year Treasury yield at 4.67%; German 10-year yield at 2.73%; UK 10-year yield stable.