Nasdaq, S&P 500 Seeing Further Upside, Dow Giving Back Ground

Stocks have moved mostly higher in morning trading on Friday, extending the breathtaking rally seen over the course of the previous session. With the continued advanced, the S&P 500 has reached a nearly two-month intraday high.

The tech-heavy Nasdaq has shown a particularly strong upward move, surging 126.08 points or 1.1 percent to 11,240.23. The S&P 500 is also up 16.45 points or 0.4 percent at 3,972.82.

Meanwhile, the narrower Dow is giving back ground after ending Thursday’s trading at a nearly three-month closing high. The blue chip index is currently down 135.66 points or 0.4 percent at 33,579.71.

The pullback by the Dow comes amid steep losses by healthcare-related stocks such as UnitedHealth (UNH), Johnson & Johnson (JNJ) and Merck (MRK).

The strength in the broader markets comes as stocks continue to benefit from optimism about the Federal Reserve slowing the pace of interest rate hikes following yesterday’s tamer than expected inflation data.

On the heels of the inflation data, CME Group’s FedWatch Tool is currently indicating an 80.6 percent chance the Fed will raise rates by 50 basis points next month compared to the recent 75 basis point rate hikes.

Buying interest has also been generated in reaction to news that China is loosening some Covid restrictions, reducing quarantine times for inbound travelers.

The loosening of curbs came a day after President Xi Jinping led his new Politburo Standing Committee in a meeting on Covid.

Meanwhile, traders have largely shrugged off a report from the University of Michigan showing U.S. consumer sentiment has pulled back much more than expected in November after seeing modest improvements in recent months.

The University of Michigan said its consumer sentiment index slumped to 54.7 in November after inching up 59.9 in October. Economists had expected the index to edge down to 59.5.

The report also showed a continued rebound in inflation expectations following the decreases in August and September.

One-year inflation expectations crept up to 5.1 percent in November from 5.0 percent in October, while five-year inflation expectations inched up to 3.0 percent from 2.9 percent.

Steel stocks have moved sharply higher on news of China easing Covid restrictions, resulting in a 5.2 percent spike by the NYSE Arca Steel Index.

A sharp increase by the price of crude oil is also contributing to substantial strength among energy stocks, with crude for December delivery surging $3.51 to $89.98 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 4.2 percent and the NYSE Arca Oil Index is up by 3.0 percent.

Computer hardware, transportation and chemical stocks are also seeing considerable strength, while pharmaceutical and healthcare stocks have shown significant moves to the downside.

In overseas trading, stock markets across the Asia-Pacific region moved sharply higher during trading on Friday. Japan’s Nikkei 225 Index jumped by 3.0 percent, while Hong Kong’s Hang Seng Index shot up by 7.7 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is down by 0.4 percent, the German DAX Index and the French CAC 40 Index are both up by 0.8 percent.

The bond market is closed in observance of Veterans Day.

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