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Stock Market Lower Ahead Of Powell Remarks As Small Caps Lead; This AI Stock Soars 35%

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The stock market reversed higher after Fed Chair Jerome Powell offered new thoughts on the path for interest rate policy, while earnings reports from Ulta Beauty (ULTA) and others sparked some major stock moves.




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At midday, indexes turned higher as headlines crossed with Powell’s comments from a fireside chat at Spelman College in Atlanta.

Powell said the pace at which the economy is creating jobs is moving toward a more sustainable level. “Having come so far so quickly, the FOMC is moving forward carefully, as the risks of under- and over-tightening are becoming more balanced,” a text of his remarks said.

But he cautioned, “It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease. We are prepared to tighten policy further if it becomes appropriate to do so.”

The benchmark yield was down 10 basis points to 4.25%, the lowest since Sept. 14.

The Nasdaq climbed 0.3% while the S&P 500 added 0.4%. The Dow Jones Industrial Average rose 0.5% and is at the highest point since January 2022. But the Russell 2000 outperformed with a 1.8% surge at midday Friday.

Volume rose on the Nasdaq and fell on the NYSE compared with the same time on Thursday.

The Innovator IBD 50 ETF (FFTY) rallied 1.5% and could make its first close above the 200-day moving average since Sept. 12.

At 2 p.m. ET, Powell and Fed Gov. Lisa Cook are scheduled as part of a roundtable discussion at the same college.

Stock Market Gets Manufacturing Data

This morning, the revised November S&P Global US Manufacturing Purchasing Managers’ Index was unchanged from the initial 49.4 estimate, down from 50.0 in October.

“U.S. manufacturers reported yet another tough month in November,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in the report. “Output barely rose as inflows of new work showed a renewed decline, hinting at little — if any — contribution to fourth quarter GDP from the goods-producing sector.”

The Institute for Supply Management manufacturing index was unchanged at 46.7 in November from the prior month. It was weaker than economists’ forecasts.

“Manufacturing activity has now contracted for 13 consecutive months as it buckles under the weight of high interest rates and fading demand,” noted BMO Capital Markets Senior Economist Jay Hawkins. “The current streak of sub-50 readings, which indicates contraction, is the longest since the dot-com bubble burst.”

The S&P 500 and Nasdaq just concluded a November that had the largest one month percentage gain since July 2022. The S&P rallied 8.9% and the Nasdaq 10.7%. For the Dow, November was the best month since October 2022.

While the stock market still has seasonal factors in its favor (December is among the best three months of the year for the major indexes, says the Stock Trader’s Almanac), indexes could be getting tired. For now, IBD continues to recommend 80%-100% exposure, which should be gradually adjusted for new opportunities and any profit-taking.

United Rentals (URI) climbed above the 488.73 buy point of a cup-with-handle base. Volume was three times its average. InterContinental Hotels (IHG) also broke out of a cup with handle, this one with a 79.20 buy point.

AerCap Holdings (AER) rose past the 68.86 buy point of a cup with handle, but volume was weak. Iron Mountain (IRM) rose past a 64.48 buy point.

Stock Market Earnings Movers

Elastic (ESTC) soared 31% and gapped above a short cup base in heavy volume. The data software company beat October-quarter earnings late Thursday. Generative artificial intelligence is boosting its business.

Samsara (IOT) jumped 18% and climbed above the 32.41 buy point of a cup base. Late Thursday, they reported third quarter earnings and revenue that topped expectations. Samsara, which makes sensors, cloud software and GPS tracking for vehicle fleets and industrial operations, also gave revenue guidance that was above expectations.

Cosmetics retailer Ulta Beauty vaulted 12% to a four-and-a-half month high in heavy trading. The company’s October-quarter earnings and revenue beat views late Thursday, while same-store sales exceeded expectations.

But Marvell Technology (MRVL) fell 5% in active trading. The chipmaker late Thursday reported earnings above estimates for its fiscal July-October quarter. But current-quarter guidance missed views.

Dell Technologies (DELL) slid 5% and briefly undercut the 70.77 buy point of a double-bottom base. The personal computer maker late Thursday beat earnings expectations but sales for the latest quarter came in below estimates. Still, Wells Fargo and Raymond James raised their price targets on Dell.

Alibaba, Pfizer Among Stock Market Movers

Alibaba (BABA) was down 2% after Morgan Stanley downgraded the stock to equal weight from overweight and cut the price target to 90 from 110.

Pfizer (PFE) slid 4%, hitting its lowest price since March 25, 2020. The company halted late-stage trials of twice-daily danuglipron for weight loss, citing high rates of the most common adverse affects.

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