Dow finishes nearly 400 points higher as investors wait for Fed minutes

US stocks closed higher on Tuesday as traders gauged the impact of new COVID-19 restrictions in China and awaited Wednesday’s minutes of the Federal Reserve’s most recent meeting.

How are the shares traded
  • The S&P 500 SPX,
    +1.36%
    ended with a gain of 53.64 points, or 1.4%, at 4,003.58.

  • The Dow Jones Industrial Average DJIA,
    +1.18%
    rose 397.82 points, or 1.2%, to finish at 34,098.10.

  • The Nasdaq Composite rose 149.89 points, or 1.4%, to close at 11,174.40.

What drove markets

Stocks rose in thin trading as Wall Street continued to expect the Fed to slow its rate of tightening next month, Edward Moya, senior market analyst at Oanda, said in a note.

Concerns about renewed COVID restrictions in China were blamed for market weakness on Monday and may continue to weigh on stocks after investors previously expressed hope for curb easing.

“The irony is that the China reopening story has been a big positive driver of China-related risks and overall markets in recent weeks, so we trade between celebration and famine in this story,” wrote Jim Reid, strategist at Deutsche. Bank, in a morning note.

“Both of course could be right in the end. There may be many more restrictions in the near term, but stronger, more sustainable reopenings by spring. However, markets are currently struggling to price this,” Reid added.

It’s a holiday week for Wall Street, where volumes traditionally tend to decline, particularly leading up to Thursday Thanksgiving and Black Friday.

Read also: Is the stock market open on Black Friday? Thanksgiving week trading hours for major assets.

The implications of thin trading are important to remember this week, said Art Hogan, chief market strategist at B. Riley Wealth Management. It’s been a “mostly constructive market” so far, he said. But it’s “an ultra-light volume week.” Those conditions “tend to accentuate the movements in both directions,” he said.

The good news is that this could accentuate the positive, at least in early session trading. “Overall, we’re looking at a lot of things stabilizing today,” Hogan said. That includes oil prices and third-quarter results that brought in “more good news than bad news,” Hogan noted.

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Best Buy Co. Inc.
BBY,
+12.78%
and Dick’s Sporting Goods Inc.
DKS,
+10.12%
gained ground on Tuesday after beating analyst expectations. Oil prices rose after Saudi Arabia denied a report that they were considering a possible increase in production.

In a note released late Monday, the Goldman strategy research team led by David Kostin said that, assuming the U.S. economy manages to land a soft landing, the stock market will experience “less pain but no gains” in 2023.

“The performance of US equities in 2022 was all about a painful valuation downgrade, but the equity story for 2023 will be about the lack of earnings per share growth. Zero earnings growth equates to zero appreciation in the S&P 500. Our valuation model implies an unchanged P/E multiple of 17x and a year-end index level of 4,000,” said Kostin.

There were no US economic updates on notes due to be released on Tuesday, while a slew of data is expected on Wednesday, including minutes from the Fed’s November policy meeting.

Companies in the picture
  • The shares of Dick’s Sporting Goods Inc. initially fell, but recovered on Tuesday after the release of third-quarter results. Shares of the retailer rose 10.1% after the company beat estimates with positive same-store sales and a rosy outlook.

  • The shares of Best Buy Co. Inc. rose 12.8% after third-quarter earnings, sales and same-store sales beat all expectations.

  • Dell Technologies Inc.
    DELL,
    +6.77%
    shares rose 6.8% following quarterly earnings released after Monday’s trading session. While earnings beat estimates, the company’s fourth-quarter revenue expectations were lower than analysts’ expectations.

—Jamie Chisholm contributed to this article.

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