In this article:
- Stocks Decline on Hawkish Fed Outlook
- Housing Market Headwinds Persist
- Lowered Guidance Hits Retail Stocks
- Microsoft (MSFT) and Amazon (AMZN) Face Regulatory Woes
- Asian Markets Signal Global Growth Concerns
- What to Watch Moving Forward
- TL;DR
- Question & Answer
- Today's Stock Picks for 11.21.2023 – Member's Only
Major stock indices like the Nasdaq (NDX), S&P 500 (SPX), and Dow Jones Industrial Average (DJIA) closed Tuesday's trading session in negative territory.
A key driver of the bearish sentiment was commentary from the latest Federal Reserve meeting minutes. Officials indicated that interest rates need to remain elevated to return inflation to their 2% target.
This outweighed a slight dip in 10-year Treasury yields to 4.40%. Rate sensitivity remains top-of-mind for traders.
Housing Market Headwinds Persist
The housing sector also faces obstacles from higher rates. Existing home sales fell 4.1% month-over-month in October to 3.79 million units.
On an annualized basis, existing home sales declined 14.6%. Lawrence Yun, chief economist at the National Association of Realtors, attributed the lagging sales to high mortgage rates and insufficient housing inventory.
However, the upside for homeowners is that average prices have risen over 3% from last year. Per Yun, homeowners have accumulated more than $100,000 in housing wealth over three years.
Lowered Guidance Hits Retail Stocks
Earnings results from prominent retail chains like Lowe's (LOW) and Best Buy (BBY) indicated uneven consumer demand. Although both companies exceeded profit expectations, they fell short on revenue projections.
In response, Lowe's decreased its full-year outlook for sales growth and earnings. Its stock declined 3.1% on Tuesday. Best Buy also cut guidance and its shares dipped 0.7%.
On the flip side, off-price retailer Burlington Stores (BURL) issued strong third-quarter results, sending its stock up 20.7%. It topped views on both the top and bottom lines.
Microsoft (MSFT) and Amazon (AMZN) Face Regulatory Woes
Outside retail, key tech stocks faced challenges. Microsoft (MSFT) continues to grapple with an ongoing antitrust case regarding its business practices and partnerships.
Similarly, e-commerce titan Amazon (AMZN) battles a Federal Trade Commission probe into a disputed pricing algorithm. Its shares dropped 1.5% Tuesday amid reports former CEO Jeff Bezos may sell additional shares after unloading 1.7 million last week.
Asian Markets Signal Global Growth Concerns
The unease also reached international stock exchanges. Bellwethers like Japan's Nikkei 225 and South Korea's Kospi indices witnessed considerable declines.
This indicates global investors are adopting a more risk-averse posture in reaction to rising rates and regulatory scrutiny of tech leaders.
What to Watch Moving Forward
In light of current market dynamics, monitor upcoming Fed commentary for indications of potential rate changes.
Additionally, keep an eye on tech stocks like Microsoft (MSFT) and Amazon (AMZN) as they navigate antitrust lawsuits. Their outcomes could significantly impact growth trajectories.
For housing and retail, look to earnings reports for signals of consumer resilience. With the right insights and adaptability, investors can ride out periods of uncertainty. We will continue providing updated analysis to navigate the ever-shifting financial landscape.
Best,
Algo Adviser
algoadviser.ai
Overall market sentiment today: Bearish
Bullish Cases:
- Dick's Sporting Goods (DKS) stock rose 2.2% on strong Q3 earnings results, indicating resilient consumer demand.
- Upgraded revenue forecast for Intel (INTC) by KeyBanc Capital Markets, projecting optimism for the chipmaker.
- Boeing (BA) shared positive news of potential new orders from United Airlines (UAL), signaling commercial aviation demand.
Bearish Cases:
- Major indices like the Nasdaq (NDX), S&P 500 (SPX), and Dow Jones (DIA) declined, with the Nasdaq seeing its largest one-day drop in 2 months.
- The yield on the 30-year Treasury reached its highest level since 2007, reducing risk appetite.
- Goldman Sachs (GS) and American Express (AXP) dropped significantly amidst rising rate pressure on bank lending standards.
- Microsoft (MSFT) and Amazon (AMZN) face antitrust scrutiny, clouding growth outlooks.
- Bellwethers like Japan's Nikkei 225 and South Korea's Kospi fell considerably, indicating global growth concerns.
Conclusive Sentiment: Bearish
The conclusive sentiment is bearish given the considerable declines across major indices, rising Treasury yields reducing risk tolerance, growth uncertainty from regulatory challenges on tech titans MSFT and AMZN, and negative signals from Asian markets. These bearish factors outweighed some positive earnings reports and analyst optimism for select stocks.
Read more from these trusted sources:
- https://www.cnbc.com/2023/11/20/stock-market-today-live-updates.html
- https://www.kiplinger.com/investing/stocks/stock-market-today-stocks-close-lower-after-fed-minutes-retail-earnings
- https://apnews.com/article/stock-markets-rates-holidays-922bfe4f094dad0b4222ad30883c15ec
- https://www.tipranks.com/news/stock-market-news-today-11-21-23-futures-shaky-ahead-of-fomc-minutes-nvda-results
TL;DR:
Major stock indexes like the Nasdaq (NDX), S&P 500 (SPX), and Dow Jones (DIA) closed lower Tuesday amid a hawkish Federal Reserve outlook that rates may remain high to curb inflation. This overshadowed positive housing wealth trends. Earnings were mixed with retailers like Lowe's (LOW) and Best Buy (BBY) cutting guidance despite solid profits while Dick's Sporting Goods (DKS) and Burlington Stores (BURL) beat expectations. However, descending blue chip stocks like Goldman Sachs (GS) and pressure on tech giants Microsoft (MSFT) and Amazon (AMZN) from antitrust lawsuits fueled the bearish tilt. Downturns in Asian benchmarks like Japan's Nikkei 225 also signaled global worries about slowing growth and rising rates. Overall sentiment was risk-averse with treasury yields elevated and key stocks facing policy or demand headwinds.
Q&A:
Why did major stock indices like the Nasdaq, Dow Jones, and S&P 500 decline on November 21, 2023?
The key driver was hawkish commentary from the latest Federal Reserve meeting minutes indicating interest rates need to stay elevated to curb lingering inflation.
What mixed retail earnings were reported on November 21, 2023?
While companies like Lowe's and Best Buy beat profit views, they cut full-year guidance. However, Dick's Sporting Goods and Burlington Stores exceeded both revenue and EPS estimates.
Why did Microsoft and Amazon stock face pressure on November 21, 2023?
They are grappling with respective antitrust lawsuits regarding business practices and a disputed pricing algorithm, weighing on growth.
What signals are Asian stock market declines sending?
Descents in bellwethers like Japan's Nikkei 225 and South Korea's Kospi indicate investors globally are becoming more risk-averse.
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