The S&P 500 edged up to a record closing high at the end of a choppy day of trading. The Dow was off just slightly as declines in shares of Cisco weighed on the 30-stock index.
Stocks briefly dropped more steeply Thursday afternoon after the Financial Times reported U.S. and Chinese officials were struggling to finalize a phase one trade deal, as the two sides tiff over intellectual property provisions, agricultural purchase agreements and tariffs.
Here’s where the markets settled Thursday at the end of regular equity trading.
S&P 500 (^GSPC): +0.08%, or 2.59 points
Dow (^DJI): -0.01%, or 1.63 points
Nasdaq (^IXIC): -0.04%, or 3.08 points
10-year Treasury yield (^TNX): -4.7 bps to 1.822%
Gold (GC=F): +0.53% to $1,471.00 per ounce
A number of Federal Open Market Committee members were on the docket to deliver public remarks Thursday, providing more guidance as to the direction of future monetary policy after the Federal Reserve’s October rate cut. Powell submitted identical prepared remarks to both the House Committee on the Budget and the Joint Economic Committee.
To this end, Fed Chair Jerome Powell’s second day of congressional testimony was the headlining event. He spoke before the House Budget Committee starting at 10 a.m. ET.
Other Fed speakers Thursday included Vice Chair Richard Clarida, Chicago Fed President Charles Evans, San Francisco Fed President Mary Daly, New York Fed President John Williams, St. Louis Fed President James Bullard and Dallas Fed President Robert Kaplan.
Markets largely took Powell’s remarks during testimony both days to serve as a reiteration of the Fed’s previously telegraphed message that rates would remain on hold until the economic outlook shifted materially.
“While Powell didn’t change the message from the last FOMC meeting, he did add a few details,” JPMorgan economist Michael Feroli wrote in a note Wednesday. Powell used the testimony in part to segue “into a discussion of the need for fiscal policy to support the economy in the next downturn, given monetary policy’s now-limited scope to provide such support” after three rate cuts this year to a range of between 1.5% and 1.75%, Feroli said.
“While the executive branch has been preemptively blaming the Fed for any potential future economic slowdown, [yesterday] the Fed preemptively requested policy support from the legislative branch in the event of such a slowdown,” he said.
In his testimony, Powell underscored the “favorable” outlook for the U.S. economy as data came in better than expected in recent weeks. Other global economies, however, have been less robust.
The German economy grew at an anemic 0.1% pace in the third quarter, according to preliminary government data Thursday. However, this was a surprise increase in economic activity for the euro area’s largest economy, helping avoid a technical recession following a downwardly revised 0.2% GDP decline in the second quarter. A recession is defined as two consecutive quarters of negative growth.
Consensus economists had expected German GDP to decline by 0.1% in the third-quarter, as Germany’s key manufacturing sector continued to be hit by an ongoing trade war. Overall, eurozone economic growth was just 0.2% in the third quarter, matching expectations and the second quarter’s growth rate for the slowest rate of increase since September 2018.
STOCKS: Walmart raises outlook, Cisco guides down again
Walmart (WMT) posted strong third-quarter sales and raised guidance for the full-year ahead of the holiday season. Comparable same-store sales, a closely watched metric for retailers, climbed 3.2% in the U.S. excluding gas, as the number of customers and average ticket grew. This topped the 3.1% sales growth expected, according to Bloomberg.
The retail giant boosted its outlook for full-year adjusted earnings per share and said it now expects to see a slight increase, after in August guiding toward a slight decrease to a slight increase over last year.
Canopy Growth Corporation (CGC, WEED.TO) posted sales that fell far below expectations and a much wider than expected loss as the Canadian cannabis company struggled to work through a number of headwinds facing its nascent sector. Net losses came out to C$374.6 million in the fiscal second quarter, or more than double expectations, due to charges relating to product returns and price adjustments, as well as high stock-based compensation expenses. Sales were just C$85.26 million, below expectations for C$102.3 million.
“The last two quarters have been challenging for the Canadian cannabis sector as provinces have reduced purchases to lower inventory levels, retail store openings have fallen short of expectations, and Cannabis 2.0 products are yet to come to market,” CEO Mark Zekulin said in a statement, adding that he believes “these conditions are a short-term headwind in what is a brand-new industry.” Shares fell more than 14% Thursday, adding to loses of more than 31% for the year-to-date.
Cisco (CSCO) posted disappointing guidance for the current quarter, eclipsing better than expected fiscal first-quarter results and sending shares lower in early trading. In a statement, Cisco CEO Chuck Robbins called out a “challenging macro environment.”
The maker of networking equipment and software unexpectedly guided toward a second-quarter revenue declined of between 3-5%, well below the 2.7% sales increase expected. It anticipates earnings will be as much as 77 cents per share on an adjusted basis, or two cents short of estimates.
For the reported fiscal first quarter, adjusted earnings of share of 84 cents on revenue of $13.16 billion were better than the 81 cents a share on sales of $13.09 billion anticipated.
ECONOMY: Producer prices rise by the most in six months
Producer prices increased more than expected in October, pointing to stabilizing inflationary trends and bolstering a case for the Fed to leave interest rates on hold for the time being.
The headline producer price index (PPI) rose 0.4% in October from September, the Labor Department said Thursday. This was faster than the 0.3% rise expected by economists and the 0.3% decline posted in September and represented the fastest gain in six months. PPI rose 1.1% over last year, faster than the 0.9% increase anticipated.
PPI excluding the more volatile food, trade and energy price categories rose 0.1%, after remaining flat on a monthly basis in September. Over the year prior, this so-called core measure of PPI rose 1.5%, slowing slightly from September’s 1.7% annual gain.
Separately, initial jobless claims rose more than expected for the week ended Nov. 9, reaching the highest level in five months. New unemployment claims rose to a seasonally adjusted 225,000 for the period, or 10,000 more than expected by consensus economists after the week prior’s reading of 211,000.
Continuing unemployment claims totaled a seasonally adjusted 1.683 million for the week ended Nov. 2, matching expectations.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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