​​​​​​​Wall Street Optimism, Fed Caution, and Global Economic Trends | Daily Market Analysis

Key events:

• USA - Thanksgiving Day

Wednesday witnessed a rise in Wall Street's primary indices, fueled by optimism that the Federal Reserve had concluded its cycle of interest rate hikes. Despite this positive sentiment, escalating Treasury yields and lackluster earnings reports tempered the overall market gains.

The Dow Jones Industrial Average gained 0.4%, the S&P 500 rose 0.6%, and the NASDAQ Composite added 1.1%.

The resurgence of US equities in November, with the S&P 500 edging closer to its peak for the year, reflected a nuanced economic landscape. Recent data indicated both a softening economy due to the Fed's assertive policies and a resilience capable of avoiding recession.

However, the minutes unveiled from Tuesday's Fed meeting revealed a cautious stance on monetary policy, dimming hopes for an early rate cut next year. Light trading volumes added to the market's subdued dynamics in anticipation of the Thanksgiving holiday on Thursday. Further complicating the outlook for interest rate cuts, a survey disclosed a second consecutive monthly increase in US consumers' inflation expectations for November.

Despite indicating a willingness to raise rates only if inflation control progress falters, this approach tempered enthusiasm, leading to a decline in 10-year Treasury yields to 4.39% and the 30-year Treasury to 4.54%, its lowest since Sept. 22.

Thanksgiving shifted the weekly jobless claims data to Wednesday, reporting 209,000 claimants, below the expected 225,000. Conversely, orders for durable US goods fell more than anticipated in October.

The corporate landscape buzzed with excitement as Nvidia (NASDAQ: NVDA) unveiled its latest quarterly earnings, riding high on the wave of increased demand for AI-driven products. Surpassing expectations in both revenue and profit, the tech giant showcased its resilience amid a thriving market.

However, a shadow loomed as it cautioned about a significant sales dip in its crucial Chinese market, attributing it to the recent extension of sanctions on cutting-edge AI chips by the Biden administration. This cautionary note led to a 0.2% drop in the company's share price at the opening bell. Meanwhile, in a swift turnaround, Sam Altman is poised to reclaim leadership at OpenAI mere days after his ousting as the CEO of the prominent generative artificial intelligence group.

European shares surged to a two-month peak on Wednesday, propelled by real estate stocks sensitive to interest rates. The pan-European STOXX 600 closed 0.3% higher, with a remarkable 1.5% climb in real estate stocks leading the gains.

Eurozone equity market volatility reached its lowest level since July, while bonds showed little movement as central bank officials provided scant resistance to investor expectations of a future interest rate decrease.

Across the Channel, British software firm Sage achieved a record high, soaring 13.3% on the STOXX 600. This ascent followed the company's robust annual operating profit report and the revelation of a substantial share buyback plan. Meanwhile, in the UK, Finance Minister Jeremy Hunt unveiled tax cuts for workers and offered investment incentives to businesses in a bid to stimulate the economy ahead of an anticipated 2024 election. Despite this, the FTSE 100, dominated by energy stocks, dipped 0.2%, trailing other regional markets due to the impact of weak crude prices, accentuated by a delayed OPEC+ meeting.

Positive weekly Initial Jobless Claims in the US on Wednesday provided a boost for the US Dollar, intensifying concerns among investors about potential tightening by the Federal Reserve (Fed). Despite evidence of inflation, the resilient US labor market may prompt Fed officials to consider further tightening, unsettling investors.

Meanwhile, the Canadian Dollar experienced widespread declines on Wednesday, influenced by a sell-off in Crude Oil and a broader market shift toward the US Dollar. Loonie traders are eyeing Friday's Retail Sales figures from Canada, though the impact may be overshadowed by the imminent release of US Purchasing Managers' Index (PMI) figures.