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Stocks were volatile Tuesday, as volume thinned out ahead of Thanksgiving. As a reminder, the stock and bond markets are closed on Thursday for the holiday and will close early on Black Friday. Today, tech stocks remained in focus as AI bubble worries lingered, while several retailers rallied thanks to upbeat earnings reports.
After tumbling to notable losses in mid-morning trading, the blue-chip Dow Jones Industrial Average closed up 1.4% at 47,112, the broader S&P 500 added 0.9% to 6,765, and the tech-heavy Nasdaq Composite gained 0.7% to 23,025.
Nvidia (NVDA) was the worst Dow Jones stock today, shedding 2.6% after The Information suggested that Meta Platforms (META, +3.8%) is considering using chips from Alphabet’s (GOOGL, +1.5%) Google to run its data centers.
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This sparked “fears that Nvidia’s AI monopoly may be ending,” says Louis Navellier, chairman and founder of Navellier & Associates. “This is an interesting report, but so far, there is no reaction from the analyst community, which is forecasting 66.4% annual sales growth and 70.9% forecasted earnings growth for Nvidia.”
It’s been a rough month for NVDA – down 12% so far – on concerns the AI trade has run too far, too fast. But Wall Street remains overwhelmingly bullish toward the tech stock.
Of the 64 analysts covering Nvidia who are tracked by S&P Global Market Intelligence, 49 say it’s a Strong Buy, 11 have it at Buy, three rate it at Hold and one has it at Strong Sell. This works out to a consensus Strong Buy rating.
Abercrombie, Kohl’s surge roughly 40% apiece after earnings
While several tech stocks struggled on Tuesday, a number of retailers had really good days. Abercrombie & Fitch (ANF), for one, jumped 37.5% after the specialty apparel retailer reported higher-than-expected fiscal third-quarter results as solid growth in its Hollister segment offset weakness in its namesake brand.
For its fourth quarter, Abercrombie expects revenue growth of 5% at the midpoint – below analysts’ estimates – on inline earnings of $3.55 per share. For the full fiscal year, the retailer is calling for revenue growth of 6.5% at the midpoint, slightly higher than the 6.2% Wall Street expects.
Kohl’s (KSS) was another big post-earnings winner, climbing 42.5% after the department store chain disclosed fiscal third-quarter earnings of 10 cents per share – beating analysts’ estimates for a per-share loss of 20 cents. Revenue also came in higher than anticipated.
“While these results are encouraging, we continue to operate in an environment where our customers are becoming increasingly choiceful as their discretionary income remains pressured,” said Michael Bender, who on Monday was named CEO of the retailer after serving in the role on an interim basis for the past six months.
This is especially true among low to middle-income consumers and younger customers, Bender added, noting that he expects this consumer behavior “to continue into the fourth quarter as we believe the macroeconomic environment will remain uncertain.”
Rate-cut hopes rise after September retail sales data
In economic news, the Census Bureau said retail sales edged up 0.2% from August to September, missing economists’ forecasts for a 0.3% rise and signaling a sharp deceleration from July and August.
Meanwhile, the Bureau of Labor Statistics said its Producer Price Index (PPI), which measures what businesses are paying suppliers for goods and services, rose 0.3% month over month in September and was 2.7% higher year over year.
Core PPI, which excludes volatile food, energy and trade-related costs, was up 0.1% from August to September and 2.7% from the year prior.
“Producer inflation for final demand excluding food and energy was almost flat,” says Scott Helfstein, head of investment strategy at Global X. “This suggests that tariffs are not really playing a major role across the economy more broadly. Companies are managing their costs and that is turning up in the data.”
Helfstein believes the two shutdown-delayed economic reports will do little to move the Federal Reserve’s rate-cut plans and expects the central bank to lower interest rates at its December meeting.
The odds of this occurring are on the rise. According to CME FedWatch, futures traders are pricing in an 83% probability of a quarter-point rate cut next month, up from 50% one week ago.
