As Americans headed off to visit family and friends, stock indexes added to gains ahead of the Fed’s minutes on Tuesday afternoon.
The Dow Jones Industrial Average was up 0.3% and the S&P 500 was up 0.4% in strong morning trading on Wednesday. The Nasdaq composite rose 0.7%, while the Russell 2000 small-cap index rose 0.2%.
Volume on the Nasdaq and NYSE rose solidly from Tuesday morning levels.
The yield on 10-year Treasury notes fell to 3.73%, while crude oil fell more than 3% to $77.71 a barrel, resuming its downward trajectory. The January 2023 futures contract fell to an 11-month low overnight.
Durable goods orders rose 0.5% in October, beating analysts’ expectations for almost no change. The rising upside underscores continued resilience in the U.S. economy despite macro headwinds.
New home sales rose again in October, adding 632,000, compared with the consensus of 578,000. At the end of November, consumer sentiment rose to 56.8, higher than the consensus of 55.5 and the initial reading of 54.7.
Bitcoin and Crypto Shorting?
Crypto-assets look like beaten winners after the FTX fiasco, but short sellers may have pressed their bets too aggressively.
Bitcoin rose to $16,000 on Wednesday morning Coinbase (COIN) rose nearly one point.
Bitcoin’s weekly chart shows its relative strength falling to its lowest levels since January 2019.
The digital currency has tripled in value in the six months since this historic low. The one-year return was even more phenomenal, lifting Bitcoin by nearly 1000%.
Stock Market Awaits Fed Minutes
As MarketWatch reported this morning, David Donabedian, chief investment officer at CIBC Private Wealth USA, does not expect the release of the 2:00 PM ET Fed minutes to change the status quo.
“We’re going to see discussions and debates around the two-step process, in other words, the importance of slowing the pace of rate hikes, while at the same time looking like we haven’t declared victory over inflation,” Donabedian said.
Afternoon stock trading should be light despite the release, if history is any guide, as Americans head out in droves to visit family and friends. US stock markets close on Thursday and are open for half-day sessions on Friday.
But half a day does not guarantee low volatility.
Back in 2009, Dubai shocked global markets on the Wednesday afternoon before Eid by warning it would have to reschedule debt for its flagship Dubai World fund.
American traders were forced to sit on their hands while eating turkey legs, watching their non-American counterparts digest the risk of financial contagion. When Friday’s half-day session rolled around, it created a volatile whiplash, picking up smarts and pocketbooks from holiday sales.
And just last year, the Dow Jones plunged more than 900 points on Black Friday, when the first reports of an Omicron outbreak in South Africa made the rounds.
Black Friday Vs. Inflation monster
Investors rewarded and punished retail earnings reports this week, highlighting mixed views on the 2022 holiday sales season. Tuesday’s price action showed this conflict closely Best Buy (BBY) increased by 12.8% Dollar tree (DLTR) was dumped by about 8%.
The National Retail Federation expects holiday sales to grow 6% to 8% in 2022, compared to 13.5% growth in 2021. The group believes that high inflation will force consumers to downsize gifts to cheaper and fewer items. However, the labor market remains firm and there are few signs that loan delinquencies are increasing.
With inflation easing, consumers are likely to surprise everyone and spend more than expected.
Friday marks the official start of the holiday season, but the ads have been running for weeks. And we are already seeing signs of serious discounts.
Supplies will be a key piece of this year’s holiday sales puzzle, as retailers are already saddled with inventory. This happened as they filled warehouses at the beginning of 2022 and expected a big increase in purchases after the pandemic.
The Russia-Ukraine war added to supply chain disruptions. The catalysts, combined with the massive liquidity injection during the pandemic, led to the worst inflation in four decades.
Cheap Stocks to Buy and Watch: 5 to Watch Now
Stock Shifters and Pullers
The Innovator IBD 50 ETF ( FFTY ) fell 0.5%.
IBD 50 and Dow Jones component Exxon Mobil (XOM) had a big return in 2022, gaining more than 80%.
The fossil fuel giant established a buy point in a three-month consolidation pattern in October and moved into narrow range action. Despite weak moves in energy markets on Wednesday, it is trading just below its all-time high.
IBD 50 biotech leader Catalyst Pharmaceuticals (CPRX) consolidated to an all-time high on Tuesday after a big breakout. After the 12.5% rally, it fell back into the buy zone and may settle at a low-risk high-reward price in the next few sessions.
Enphase energy (ENPH) explored a buy point of a bearish cup base early Wednesday, testing this key level for most of November, but bulls have become more aggressive, perhaps supporting a strong follow-through rally.
Follow Alan Farley on Twitter at @msttrader.
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