Stocks Set for Breather After Four-Week Rally: Markets Wrap

(Bloomberg) — Stocks looked poised to pull back after hitting overbought levels in a rally that sent the market toward one of its biggest meltups over the last 100 years.

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S&P 500 contracts edged lower after notching a four-week rally. Wall Street’s “fear gauge” — the VIX — was set to halt a slide that drove the equity-volatility gauge to its lowest since 2020. Cryptocurrency-linked shares dropped as Bitcoin slid. Traders will keep a close eye on retailers as Cyber Monday kicked off. Gold topped $2,000 as the dollar continued to weaken. Bond yields fell.

“The technical backdrop in the stock market right now is critically important,” said Matt Maley, chief market strategist at Miller Tabak + Co. “This does not mean that we’re about to see an important top in the stock market. It could just mean that we’ll see a mild pullback or even a ‘sideways’ correction at some point in the next week or two to work off this overbought condition.”

Read: Billions Wiped Out as Stock-Safety Trade on Wall Street Misfires

Predictions of a record high for the S&P 500 next year are intensifying, with Deutsche Bank Group AG strategists led by Binky Chadha expecting the benchmark to hit 5,100 by the end of 2024 — implying gains of about 12% from current levels — against a backdrop of cooling inflation and a rebound in corporate earnings.

“Despite above-trend growth, core inflation has fallen,” the strategists wrote in a note. “Continued declines would return inflation to its pre-pandemic range without requiring slower growth.” Moreover, given that any recession “is widely anticipated and expected to be mild and short, we see only a modest short-lived selloff.”

In earnings, Crowdstrike Holdings Inc. will underscore how businesses are prioritizing cybersecurity after recent high-profile corporate hacks, while Salesforce Inc. and Dell Technologies Inc. are expected to post slower sales growth when they report this week, as overall corporate expenditure tightens.

The selloff that’s ripped through green stocks looks set to continue into 2024, bringing a fourth consecutive year of losses, according to Bloomberg’s latest Markets Live Pulse survey.

The negative sentiment appears poised to engulf a wider array of green asset classes, with Tesla Inc. seen at risk of losing its place among the 10 biggest stocks in the S&P 500. Almost two-thirds of the 620 MLIV Pulse respondents said they plan to stay away from the electric-vehicle sector, and 57% expect the iShares Global Clean Energy exchange-traded fund — which is down about 30% this year — to extend its slide in 2024.

Corporate Highlights:

  • A top-performing European fund manager is calling time on “hype” around weight-loss drugs that has sent Novo Nordisk A/S’s stock price rallying more than 50% this year.

  • Elliott Investment Management has revived calls for changes at Crown Castle Inc. after disclosing a roughly $2 billion stake in the tower operator.

  • Foot Locker Inc., a sports-apparel retailer, was downgraded to sell from neutral at Citigroup Inc.

  • Shopify Inc. said merchants set a Black Friday record with a combined $4.1 billion in sales.

  • Alibaba Group Holding Ltd. has shuttered its quantum computing research lab, a sign that the Chinese e-commerce and cloud operator is considering more cutbacks to bulk up the bottom line.

Key events this week:

  • Meeting of NATO foreign ministers in Brussels, Tuesday-Wednesday.

  • ECB governing council member Pablo Hernandez de Cos and Bank of England Deputy Governor Dave Ramsden speak, Tuesday

  • US Conf. Board consumer confidence, Tuesday

  • Fed Governor Chris Waller speaks, Chicago Fed President Austan Goolsbee speak, Tuesday

  • New Zealand rate decision, Wednesday

  • OECD releases biannual economic outlook, Wednesday

  • Eurozone economic confidence, consumer confidence, Wednesday

  • Germany CPI, Wednesday

  • Bank of England Governor Andrew Bailey speaks, Wednesday

  • US wholesale inventories, GDP, Wednesday

  • Cleveland Fed President Loretta Mester speaks, Wednesday

  • Fed releases its Beige Book, Wednesday

  • China non-manufacturing PMI, manufacturing PMI, Thursday

  • OPEC+ meeting, Thursday

  • Eurozone CPI, unemployment, Thursday

  • US personal income, initial jobless claims, pending home sales, Thursday

  • Dell earnings, Thursday

  • China Caixin Manufacturing PMI, Friday

  • Eurozone S&P Global Manufacturing PMI, Friday

  • US construction spending, ISM Manufacturing, Friday

  • Fed Chair Jerome Powell to participate in “fireside chat” with Spelman College President Helene Gayle in Atlanta, Friday

  • Chicago Fed President Austan Goolsbee speaks, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.1% as of 9 a.m. New York time

  • Nasdaq 100 futures fell 0.1%

  • Futures on the Dow Jones Industrial Average fell 0.1%

  • The Stoxx Europe 600 fell 0.1%

  • The MSCI World index was little changed

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1%

  • The euro was little changed at $1.0944

  • The British pound rose 0.2% to $1.2625

  • The Japanese yen rose 0.4% to 148.79 per dollar

Cryptocurrencies

  • Bitcoin fell 1.8% to $36,947.64

  • Ether fell 2.5% to $2,023.57

Bonds

  • The yield on 10-year Treasuries declined three basis points to 4.44%

  • Germany’s 10-year yield declined seven basis points to 2.57%

  • Britain’s 10-year yield declined five basis points to 4.23%

Commodities

  • West Texas Intermediate crude fell 0.8% to $74.97 a barrel

  • Spot gold rose 0.5% to $2,011.72 an ounce

This story was produced with the assistance of Bloomberg Automation.

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