Dow ends nearly 400 points higher as tech rally leads stocks to highest close since September

What happened

• The Dow Jones Industrial Average
  DJIA
  rose 391.16 points, or 1.2%, to close at 34,283.10.

• The S&P 500
  SPX
  ended with a gain of 67.89 points, or 1.6%, at 4,415.24.

• The Nasdaq Composite
  COMP
  advanced 276.66 points, or 2%, to finish at 13,798.10.

The rally left the Dow with a weekly gain of 0.7%, while the S&P 500 advanced 1.3% and the Nasdaq booked a rise of 2.4%. The Dow saw its highest close since Sept. 20, while the S&P 500 ended at its highest since Sept. 19 and the Nasdaq at its highest since Sept. 14.

Market drivers

Tech was in the driver’s seat. Shares of Microsoft Corp.
MSFT,
+2.49%
jumped 2.5%, with the Dow component scoring its third record close in four sessions. Intel Corp. shares
INTC,
+2.80%
rose 2.8% to lead Dow gainers.

Meanwhile, the S&P 500 tested important chart resistance at the 4,400 to 4,415 level, which marks the confluence of previous resistance and the 61.8% Fibonacci retracement of the July-October drop, according to Matthew Weller, global head of research at Forex.com, in a note (see chart below).

“From a bigger picture perspective, bulls will need to see the index conclusively break above 4415 before declaring that the post-July streak of lower lows and lower highs is over,” Weller wrote.

The S&P 500 and Nasdaq Composite ended their longest winning streaks since November 2021 on Thursday, after a poorly-received $24 billion sale of 30-year Treasury bonds.

A calmer bond market may have helped set the tone for stocks. The yield on the 30-year Treasury bond
BX:TMUBMUSD30Y
fell 3.2 basis points to 4.733%, after it nearly notched its biggest one-day jump since June 2022. The yield still saw a weekly decline, its third straight.

It was unclear whether the Treasury auction had been affected by a reported ransomware attack against the U.S. unit of the Industrial & Commercial Bank of China that apparently disrupted the U.S. Treasury market.

See: How ransomware attack on ICBC rattled the Treasury market and shook up a 30-year bond auction

Thursday’s setback was also tied to comments from Federal Reserve Chairman Jerome Powell, who told an International Monetary Fund panel on Thursday that the central bank was wary of “head fakes” from inflation, and the “2% goal was not assured.”

Much of Powell’s language was nearly identical to remarks he made on Nov. 1, when investors rallied stocks and bonds after the Fed chair didn’t explicitly commit to a further interest rate hike. But the subsequent rally for stocks after the Nov. 1 Fed meeting, with the S&P 500 jumping more than 6% over eight days, and a 50 basis point drop in the 10-year Treasury yield were “overdone and not governed by facts,” said Tom Essaye, founder of Sevens Report Research, in a note.

“Meanwhile, if we think about what the Fed said last week, namely that the rise in the 10-year yield was doing the Fed’s work for it and as a result they may not have to hike rates, then the short/sharp decline in the 10-year yield we’ve seen could essentially remove the reason for the Fed not having to hike rates — and that could put a rate hike back on the table!” he wrote. “That’s essentially what Powell reminded us of yesterday and that, along with the poor Treasury auction, pushed yields higher,” setting up pressure on stocks.

U.S. consumer sentiment fell in November for the fourth month in a row due to worries about higher interest rates as well as war in the Middle East. The preliminary reading of the sentiment survey declined to 60.4 from 63.8 in October, the University of Michigan said Friday. It’s the weakest reading since May.

Investors were also tuning into more comments by Fed officials Friday, including San Francisco Fed President Mary Daly, who said she didn’t know if rates were high enough to bring inflation back down to the central bank’s 2% target.

Companies in focus

• Shares of Plug Power Inc.
  PLUG,
  -40.47%
  dropped 40.5% after the fuel-cell company missed analysts expectations and said its performance had suffered due to “unprecedented supply challenges.”

• Trade Desk Inc.
  TTD,
  -16.66%
  shares fell 16.7% after the advertising technology company’s guidance fell short of expectations.

• Illumina Inc.
  ILMN,
  -8.05%
  shares dropped 8% after the maker of DNA-sequencing technology cut its full-year sales and profit outlook.

• Lions Gate Entertainment Corp.
  LGF.A,
  -0.66%
  shares fell 0.7% after the TV, film and media giant reported a surprise second-quarter profit, and stuck with its full-year outlook “even with the negative impact of the strike” by Hollywood’s writers and actors earlier this year.