US stocks opened with modest gains on Friday as the holiday-shortened week and a lackluster month approached their close. The tech-heavy Nasdaq Composite led the upward movement, registering an increase of approximately 0.4% shortly after the market opened. The generalist S&P 500 and Dow Jones Industrial Average followed suit, both rising slightly more than 0.2%.
The Chicago Mercantile Exchange (CME) resumed operations after a significant outage caused by a data center glitch. This disruption had affected live trading in futures and options across various markets worldwide, including US Treasurys and crude oil. As of 8:30 a.m. ET, the CME confirmed the issue was resolved, allowing trading to recommence smoothly for individual stocks.
This week has seen a marked rebound in stocks, largely due to traders increasing their bets that the Federal Reserve will cut interest rates at its upcoming meeting in December. Renewed confidence in the artificial intelligence sector also bolstered tech stocks in the days leading up to the Thanksgiving holiday.
However, as trading resumed on Friday, the overall sentiment was overshadowed by a losing month for Wall Street indexes. A slowdown in the performance of megacap tech stocks contributed to declines through November, as investors recalibrated their expectations regarding how rapidly AI-focused companies could convert hype into actual profits. By the end of November, both the Dow and S&P 500 were slightly down for the month, indicating an end to a six-month winning streak. Meanwhile, the Nasdaq experienced a 2% downturn, setting the stage for a pause in its seven-month streak of gains.
As November wraps up, analysts are beginning to release stock market forecasts for the upcoming year. Deutsche Bank has set a bullish target of 8,000 for the S&P 500 by the end of 2026, the highest among estimates. In contrast, HSBC and JPMorgan project the index will stabilize around the 7,500 mark.
Markets will close early on Friday, at 1 p.m. ET, with no major earnings or economic data slated for release.
In a related area, Wall Street’s largest banks foresee a decline in oil prices by 2026, anticipating that a long-expected supply glut will materialize.
Amid earnings reports, reactions to Q3 results within the S&P 500 have been more severe than the historical norm. Despite a solid earnings growth rate of 13.4% for the quarter, stocks have been penalized for disappointing results. A significant 83% of earnings reports exceeded expectations, yet the average stock price increase following an earnings beat was just 0.4%, down from the five-year average of 0.9%. Conversely, companies that underperform have suffered an average stock drop of 5%, significantly worse than the typical decline of 2.6%.
On the labor front, seasonal hiring appears to be less vigorous this year as layoffs and an increasing unemployment rate strain the job market. Reports suggest that seasonal hiring plans have reached their lowest levels in over a decade. The National Retail Federation noted that while consumer spending is anticipated to stay strong through the holiday season, the hiring of extra staff is expected to be among the weakest in the last 15 years.
With markets transitioning into the holiday season, traders and analysts will be watching closely to see how these economic indicators and stock responses evolve in the coming months.
