The U.S. stock market showed resilience today as key players like Nvidia (NASDAQ:NVDA) and Walmart (NYSE:WMT) supported a rebound from early losses. Despite geopolitical tensions and weak housing data, the stock market recovery was led by a rally in the Nasdaq 100 Index ($IUXX), which closed up +0.11%.
Geopolitical Risks Weigh on Markets
The escalation of the Ukraine-Russia conflict initially dampened investor sentiment. Reports that Ukraine conducted missile strikes on Russian territory and Russia’s updated nuclear doctrine spurred risk-averse behavior. These developments triggered safe-haven flows into government bonds, pushing the U.S. 10-year Treasury yield to a one-week low of 4.336% and gold prices to a one-week high.
Weak Housing Data Adds Pressure
Economic data also weighed on the market. October housing starts fell -3.1% m/m to 1.311 million, missing expectations of 1.334 million, while building permits slipped -0.6% m/m to 1.416 million. These figures highlight ongoing struggles in the housing sector, adding to the market’s early losses.
Nvidia and Walmart Lead the Recovery
Despite early challenges, the stock market recovery was buoyed by strong performances from Nvidia and Walmart.
Nvidia gained over +2%, fueled by optimism ahead of its earnings report. Investors are keen to assess whether demand for its AI Blackwell chips will remain robust, even amid reports of design adjustments due to overheating issues.
Walmart surged more than +4% after exceeding Q3 earnings expectations and raising its full-year EPS forecast. Its strong performance underscored resilience in consumer spending, providing broader market support.
Mixed Earnings Across Sectors
Of the 90% of S&P 500 companies that have reported Q3 results, 75% have beaten earnings estimates, delivering an average +8.5% y/y growth in quarterly earnings. However, results were not uniformly positive:
Super Micro Computer (NASDAQ:SMCI) skyrocketed over +29% after resolving compliance issues with Nasdaq.
Lowe’s (NYSE:LOW) dropped more than -3% after reporting a weaker-than-expected gross margin.
Global Market Trends
Overseas markets painted a mixed picture. The Euro Stoxx 50 hit a three-month low, falling -1.47%, while China’s Shanghai Composite recovered from recent losses to close up +0.67%. Japan’s Nikkei 225 gained +0.51%, buoyed by optimism in domestic equities.
Interest Rates and Monetary Policy Updates
Treasury yields continued to decline, with December 10-year T-notes gaining +8 ticks. European bond yields followed suit, as ECB officials signaled potential rate cuts in December. The 10-year German bund yield fell to a three-week low of 2.269%.
Defense Stocks Rally Amid Geopolitical Tensions
Defense stocks saw gains amid heightened geopolitical risks:
Northrop Grumman (NYSE:NOC) climbed over +1%.
Other major players, including Lockheed Martin (NYSE:LMT) and RTX Corp (NYSE:RTX), rose modestly.
Looking Ahead
Investors are eagerly awaiting Nvidia’s earnings report, which could set the tone for the technology sector’s outlook. Additionally, the market will closely monitor economic indicators and geopolitical developments to gauge the trajectory of the stock market recovery in the weeks ahead.
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