3 Things… 

1. Equity Trends: S&P500 breaks out of range with its 200-day now resistance and looking to break Aug 16 rally highs, trend continues to be DOWN and about 2.55% below its 200-day MA; the NASDAQ is trading at the Oct 5 top of the since-established trading range and is about 7% below its 200-day MA, strong DOWN trend remains intact; Dow now STRONG UP trend 3.05% above its 200-day MA and breaking out above previous range going back to April. About 80% of the S&P 500 and 52% of the NASDAQ, respectively, are above their 50-Days; Bulls25:Bears47; VIX -4.06% [1]
2. Bonds: 10Y 3.82%; 2Y 4.34%; 30Y 4.03%; 3-Mo 4.28% [2]
3. Sectors: Best 3-month sectors: Energy (+21.27%); Financials (+3.33%); Industrials (+2.85%); Crypto/Bitcoin -2.41%; [3]

This Week’s Quotable

“Speaking for the bitcoiners, we feel like we’re trapped in a dysfunctional relationship with crypto and we want out. The industry needs to grow up and the regulators are coming into this space. The future of the industry is registered digital assets traded on regulated exchanges, where everyone has the investor protections they need.” Michael Saylor, executive chairman of MicroStrategy, a technology company that owns 130,000 bitcoins on CNBC’s “Squawk on the Street” Friday. [5]

Recent Highlights

• Initial Claims increased to 225,000 (11/10)
• CPI/Core CPI increased 0.4%/0.3% (11/10)
• Nonfarm Payrolls increased by 261,000 (11/04)
• Unemployment rate increased to 3.7% (11/04)

In the Markets

U.S. stocks closed sharply higher on Thursday to record their biggest single-day percentage gains in more than two years as economic data for October suggested inflation may be peaking. Also, falling treasury yields once again sparked speculation that the Fed might now go slow with its aggressive rate-hike policy. All three major indexes ended in positive territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) climbed 3.7% or 1,202.43 points to end at 33,715.37 points. This was also the blue-chip index’s highest closing level since August.

The S&P 500 jumped 5.5% or 207.80 points to close at 3,956.37 points, recording its highest closing level since August 12. Tech real estate and consumer discretionary stocks were the biggest gainers.

The Consumer Discretionary Select Sector SPDR (XLY) jumped 7.3%, while the Technology Select Sector SPDR (XLK) gained 8.2%. The Real Estate Select Sector SPDR (XLRE) gained 7.7%. All 11 sectors of the benchmark index ended in positive territory.

The tech-heavy Nasdaq rallied 7.4% or 760.97 points to finish at 11,114.15 points, its biggest single-day percentage gain since March 2020.

The fear-gauge CBOE Volatility Index (VIX) was down 9.81% to 23.53. A total of 14.9 billion shares were traded on Thursday, higher than the last 20-session average of 11.9 billion.

Stocks Rally on Positive CIP Data

Markets closed lower on Wednesday after ending in the green for three consecutive sessions but Thursday’s rally paired with the previous day’s losses. Stocks rallied on Thursday following the release of an impressive consumer price index (CPI) reading.

October’s CPI rose a meager 0.4% month over month and 7.7% from a year ago, recording its lowest annual increase since January. The data brought in a sigh of relief for investors who were worried that the aggressive interest rate hike stance adopted by the Fed to bring down soaring inflation could push the economy into recession.

Market participants were upbeat after the release of the CPI figures as many now believe that inflation has peaked and the Fed might now consider going slow on its steep rate hike stance. Also, several Fed officials on Thursday delivered positive public remarks that gave a boost to investors’ confidence.

Patrick Harker, Philadelphia Fed President, said that the central bank is likely to slow down its pace of rate hikes in the coming months.

The positive sentiment sent stocks on a rally with stocks across sectors gaining. All the 11 components of the S&P 500 ended in the red. Following the release of the CPI report, treasury yield fell. The 10-year Treasury yield fell around 33 points 3.828%. The 2-year Treasury yield fell around 30 basis points to end at 4.32%.

The sharp drop in treasury yields sent growth-sensitive tech stocks on a rally. Shares of Amazon.com, Inc. (AMZN) surged 12.2%, while Netflix, Inc. (NFLX) gained 8%. Also, shares of Salesforce, Inc. (CRM) climbed 10.2%.

Economic Data

The CPI report remained in focus on Thursday as October inflation figures indicated easing inflation. Data released by the Labor Department showed annual CPI figures below 8% for the first time in eight months.

The CPI rose 7.7% on a year-over-year basis in October, after increasing 8.2% in the prior month. For the month, headline inflation rose just 0.4% in October, beating expectations of a rise of 0.6%. Excluding volatile food and energy prices, or core CPI increased 0.3% for the month and 6.3% from a year ago, also beating expectations.

In other economic data released on Thursday, the Labor Department reported that jobless claims totaled 225,000 for the week ending Nov 5, increasing 7,000 from the previous week’s revised level of 218,000. The four-week moving average decreased to 218,750, a decrease of 250 from the previous week’s revised average of 219,000.

Continuing claims came in at 1,493,000, an increase of 6,000 from the previous week’s revised level of 1,487,000. The 4-week moving average was 1,450,250, an increase of 32,250 from the previous week’s revised average of 1,418,000. [6]

Sources: [1][3][4] Stockcharts.com; [2] cnbc.com; stockcharts.com; morningstar.com [5] Crypto peaked in Nov. 2021: Investors lost more than $2 trillion since (cnbc.com); [6] Zacks Professional Services, “Today’s Key Market and Economic News” for Friday November 11, 2022;