Treasury bond yields rose after investors digested the latest comments from the Federal Reserve officials.

The People's Bank of China held its 1-year and 5-year loan rates for the third month in a row on the weakness in renminbi.

China coronavirus infections rise above 24,000 for the second day in a row and several cities imposed stricter lockdowns.

Stocks On Wall Street Look Down, More Cities Face Lockdowns In China

Rate jitters dominated market trading on the first day of new week and benchmark indexes eased on Wall Street. 

Investors are looking ahead to the release of the latest FOMC minutes on Wednesday and comments from the Fed officials later this week. 

Durable goods orders and new home sales data are on tap this week. 

The S&P 500 index dropped 0.8% to 3,934.69 and the Nasdaq Composite index 

Crude Oil Extend Losses On China Demand Worries 

Crude oil prices dropped after China placed more restrictions in Beijing and nationwide more than 24,000 coronavirus infections were reported for the second day in a row. 

China also reported its first Covid-related death in six months - a Beijing resident of 87-year old. 

This was the first documented death since the coronavirus outbreak in Shanghai in spring this year. 

The People's Bank of China also left its ley lending rate for medium and long terms unchanged. The rates have been unrevised for the third month in a row, following the weakening of the yen.  

The central bank left its one-year loan prime rate to 3.65% and five-year loan prime rate to 4.3%, the central bank said in an announcement today. 

The five-year rate, the reference rate for mortgage lending, was lowered by 15 basis points in May and August and by 5 basis points in January. 

The People's Bank of China reviews its lending rates on a monthly schedule. 

Crude oil declined $3.99 to $75.04 a barrel and natural gas jumped 39 cents to $6.69 a thermal unit. 

The yield on 2-year Treasury notes rose to 4.53%, 10-year Treasury notes eased to 3.80% and 30-year bonds to 3.89%. 

European Markets Trend Lower On Rising Tensions with Russia

Major averages in Europe also traded lower after commodities-linked stocks led the decliners on rising coronavirus infections in China. 

Geopolitical tensions were also on the rise int the region after Russia escalated bombing around the Zaporizhzhya nuclear power plant.

The DAX index declined 0.4% to 14,379.93, the CAC-40 index fell 0.2% to 6,634.45  and the FTSE 100 index edged lower 0.1% to 7,376.85. 

Asian Markets Fall, Berkshire Hikes Trading House Stakes In Japan 

Asian markets closed lower and inflation worries partly fueled by the rising U.S. dollar coupled with the rising tensions between Russia and NATO nations over the weekend.  

The Nikkei index in Tokyo traded sideways and Japanese stocks were in focus after Warren Buffett controlled Berkshire Hathaway increased stakes in five largest trading houses. 

Marubeni gained 1.2%, Mitsubishi Corp jumped 4.4%, Mitsui & Co increased 0.2%, Sumitomo Corp advanced 1.2% and Itochu Corp advanced 0.9%. 

The Nikkei 225 index edged up 0.2% to 27,944.79, the Shanghai Composite index decreased 0.4% to 3,085.04, the Hang Seng Index dropped 1.9% to 17,655.91 and the Sensex index edged down 0.9% to 61,144.84. 

Stocks in India traded lower on general weakness in international markets and rising worries that foreign investors are likely to accelerate funds withdrawal and repatriate on rising U.S. rates. 

Archean Chemical advanced 12% to 458.15 rupees after the company raised about $180 million and priced its initial public offering for 407 rupees or $5.0 a share. 

Central Banks Across Atlantic Fight High inflation and Low Credibility

Benchmark indexes rebounded in the final hour of trading after crude oil traded higher from the 4% loss in the morning. 

The latest comments from the Fed officials suggested that rapid rate hikes are likely to continue and interest rates are likely to stay elevated longer than previously estimated.  

However, the ongoing debate continued about the size of the next rate hike at the December meeting of Fed's policymakers. 

Market participants are divided about the future rate path after the release of the CPI index a week ago. 

The sharp market rally last week suggested that investors are estimating  a smaller rate hike of 0.50% but elevated inflation seeping in the housing market and services sector of the economy also suggest that higher rates for longer may be needed to dislodge the sky-high inflation. 

The S&P 500 index increased 0.5% to 3,965.34 and the Nasdaq Composite index was nearly unchanged to close at 11,146.06. 

For the week, the S&P 500 index declined 0.7% and the Nasdaq Composite index fell 1.6%. 

Crude oil declined as much as 4% for the second day in a row and extended 2-day decline to 10% after focus shifted from supply worries to demand concerns. 

Resurgent coronavirus infections in China dashed hopes of the rebound in economic activities and weakened the outlook for an increase in oil imports.     

Crude oil declined $1.82 to $80.27 a barrel and natural gas was unchanged at $6.37 a thermal unit. 

Treasury yields rose on the back of hawkish comments from Federal Reserve officials for three days in a row, but cryptic messages and mixed-signals have kept investors on the edge.   

Investors are increasingly factoring that higher rates may not succeed in lowering inflation to the target range of 2%, without significantly impacting the economy and labor markets. 

The yield on 2-year Treasury notes rose to 4.53%, 10-year Treasury notes inched up to 3.83% and 30-year bonds edged up to 3.93%. 

Home Sales Lowest In Eleven Years 

Existing home sales fell 5.9% to a seasonally adjusted rate of 4.43 million from September, the ninth monthly sales decline in a row. 

Home sales  fell to the lowest level since December 2011, excluding a brief decline during the onset of the pandemic, on elevated home prices and surge in mortgage rates. 

"More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher. 

The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years", said NAR chief economist Lawrence Yun.

U.S. Stock Movers 

Gap Inc jumped 2.9% to $13.10 after the struggling retailer reported unexpected quarterly profit and higher-than-expected sales. 

Third quarter net sales increased 2% to $4.04 billion and comparable sales increased 1% from a year ago. 

Online sales increased 5% from a year ago and represented 35% of total sales. 

Third quarter income swung to $282 million compared to a loss of $252 million and diluted earnings per share was 77 cents compared to a loss of 40 cents a year ago. 

Foot Locker, Inc jumped 7.4% to  $35.51 after the retailer reported higher-than-expected sales and earnings and comparable store sales rose faster-than-expected. 

The retailer also lifted its annual outlook. 

Williams Sonoma, Inc declined 6.80% to  $121.61 after the housewares retailer reported better-than-expected quarterly sales and results. 

The retailer reiterated " mid-to-high single digit annual net revenue growth and operating margins relatively in-line with our fiscal year 2021 operating margin."

The stock has been on the slide after hitting the record high above $215 on November 19, 2021. 

Ross Stores, Inc jumped 11.4% to $109.31 after the discount retailer lifted its fourth quarter guidance. 

European Markets Extend Six-week Rally, 7th Quarterly Increase In Swiss Production

European markets closed higher for the sixth week in a row and investors digested comments from the ECB president and a batch of corporate earnings. 

The European Central Bank may have to lift rates high enough to be restrictive for the economy in order to bring down inflation to its target rate, said president Christine Lagarde at a speech. 

The ECB lifted interest rates by 200 basis points since July, including back-to-back 75 basis point increases, but the current rates are not restrictive enough to have an impact on inflation. 

More rate hikes and the reduction of its 5 trillion euro debt holdings are on the way, said Lagarde. 

The central bank is largely reliant on interest rates as its main tool in bringing down 4-decade high inflation but the bank is also struggling with a pile of government holdings that are losing value with the rapid hikes in rates. 

"Interest rates are, and will remain, the main tool for adjusting our policy stance," stressed Lagarde. 

"We expect to raise rates further

ECB Plans to Go Beyond Rate Hikes and Bond Sale to Combat High Inflation

The European Central is likely to continue its campaign of rapid rate hikes in future and plans to begin withdrawing bank stimulus provided during the pandemic era. 

With inflation at 4-decade high driven by high energy prices and supply chain issues, the central bank is struggling to tame inflation using the blunt tool of interest rate control. 

The European Central Bank may have to lift rates high enough to be restrictive for the economy in order to bring down inflation to its target rate, said president Christine Lagarde at a speech. 

The ECB lifted interest rates by 200 basis points since July, including back-to-back 75 basis point increases, but the current rates are not restrictive enough to have an impact on inflation. 

More rate hikes and the reduction of its 5 trillion euro debt holdings are on the way, said Lagarde. 

The central bank is largely reliant on interest rates as its main tool in bringing down 4-decade high inflation but the bank is also struggling with a pile of government holdings that are losing value with the rapid hikes in rates. 

Moreover, the European Central Bank is asking banks to return

Movers: Applied Materials, Farfetch, Foot Locker, Gap, Palo Alto Networks, Ross Stores, Williams Sonoma

Applied Materials, Inc increased 0.5% to $105.02 after the semiconductor equipment manufacturing company reported better-than-expected quarterly results and estimated 

Revenue in the fiscal fourth quarter ending in October increased 10% to $6.75 billion from $6.1 billion a year ago. 

Gross margin decreased to 45.9% from 48.1% a year ago.   

In the quarter, net income declined to $1.59 billion from $1.71 billion and diluted earnings per share decreased to $1.85 from $1.89 a year ago. 

The equipment maker said fiscal first quarter revenue is expected around $6.7 billion with a band of $400 million, including the impact of recently announced export regulations and ongoing supply chain challenges. 

Farfetch Ltd fell 17.7% to $7.52 after the online luxury apparel and accessories platform reported weaker-than-expected sales and wider-than-expected losses. 

Third quarter sales declined 1% to  $593.4 million from gross merchandise value decreased 4.9% to $967.4 million from a year ago. 

In the third quarter, the company swung to a loss of $274.9 million from a profit of $769.1 million a year ago. 

The loss in the third quarter was driven by a drop in value of equity holdings in other businesses. 

In the period, diluted loss per share increased to 71 cents from 25 cents loss a year ago. The earnings per share doesn't take into account the changes linked to equity holdings. 

Foot Locker, Inc jumped 7.4% to  $35.51 after the retailer reported higher-than-expected sales and earnings and comparable store sales rose faster-than-expected.

Third quarter sales declined 0.7% to $2.17 billion from $2.18 billion a year ago. 

Net income plunged to $96 million from $158 million and diluted earnings per share dropped to $1.01 from $1.52 a year ago. 

The retailer also lifted its annual outlook and said full-year 2022 sales are estimated to drop in the range of 4% to 5% from the previous estimated range of 6% to 7%. 

Comparable store sales are estimated to decline between 4% and 5% from the previous estimated range of 8% to 9%. 

Gap Inc jumped 2.9% to $13.10 after the struggling retailer reported unexpected quarterly profit and higher-than-expected sales.

Third quarter net sales increased 2% to $4.04 billion and comparable sales increased 1% from a year ago.

Online sales increased 5% from a year ago and represented 35% of total sales.

Third quarter income swung to $282 million compared to a loss of $252 million and diluted earnings per share was 77 cents compared to a loss of 40 cents a year ago.

Palo Alto Networks Inc increased 6.8% to $167.34 after the cybersecurity company marginally lifted its annual outlook and reported quarterly results ahead of expectations. 

Revenue in the fiscal first quarter increased 25% to $1.6 billion and first quarter billings rose 27% to $1.7 billion. 

In the quarter, net income was $20.0 million or 6 cents a diluted share, compared to a net loss of $103.6 million or 35 cents.   

For the fiscal second quarter, the company guided revenue between $1.63 billion and $1.66 billion, an increase between 24% and 26% from a year ago. 

For fiscal 2023, the company guided revenue between $6.85 billion and $6.91 billion, an increase between 25% and 26% from a year ago. 

Ross Stores, Inc jumped 11.4% to $109.31 after the discount retailer lifted its fourth quarter guidance.

Investors Look Beyond Fed Rhetoric, Home Sales Fall 9th Month In a Row

Benchmark indexes traded sideways as investors shifted focus to corporate earnings and looked beyond comments from Fed officials. 

The latest comments suggested rapid rate hikes are likely to continue and interest rates are likely to stay elevated longer than previously estimated.  

The S&P 500 index increased 1.33 points to 3,947.89 and the Nasdaq Composite index fell 37.64 to 11,107.73. 

Crude oil declined 4% for the second day in a row and extended 2-day decline to 10% after focus shifted from supply worries to demand concerns. 

Resurgent coronavirus infections in China dashed hopes of the rebound in economic activities and weakened the outlook for an increase in oil imports.     

Crude oil declined $4.07 to $78.51 a barrel and natural gas fell 10 cents to $6.27 a thermal unit. 

Treasury yields rose on the back of hawkish comments from Federal Reserve officials for three days in a row. 

Investors are increasingly factoring that higher rates may not succeed in lowering inflation to the target range of 2%, without significantly impacting the economy and labor markets. 

The yield on 2-year Treasury notes rose to 4.47%, 10-year Treasury notes inched up to 3.78% and 30-year bonds edged up to 3.90%. 

Home Sales Lowest In Eleven Years 

Existing home sales fell 5.9% to a seasonally adjusted rate of 4.43 million from September, the ninth monthly sales decline in a row. 

Home sales  fell to the lowest level since December 2011, excluding a brief decline during the onset of the pandemic, on elevated home prices and surge in mortgage rates. 

"More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher. 

The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years", said NAR chief economist Lawrence Yun.

U.S. Stock Movers 

Gap Inc jumped 2.9% to $13.10 after the struggling retailer reported unexpected quarterly profit and higher-than-expected sales. 

Third quarter net sales increased 2% to $4.04 billion and comparable sales increased 1% from a year ago. 

Online sales increased 5% from a year ago and represented 35% of total sales. 

Third quarter income swung to $282 million compared to a loss of $252 million and diluted earnings per share was 77 cents compared to a loss of 40 cents a year ago. 

Foot Locker, Inc jumped 7.4% to  $35.51 after the retailer reported higher-than-expected sales and earnings and comparable store sales rose faster-than-expected. 

The retailer also lifted its annual outlook. 

Williams Sonoma, Inc declined 6.80% to  $121.61 after the housewares retailer reported better-than-expected quarterly sales and results. 

The retailer reiterated " mid-to-high single digit annual net revenue growth and operating margins relatively in-line with our fiscal year 2021 operating margin."

The stock has been on the slide after hitting the record high above $215 on November 19, 2021. 

Ross Stores, Inc jumped 11.4% to $109.31 after the discount retailer lifted its fourth quarter guidance. 

Bath & Body Works Sales Fall After Two Years of Rapid Growth

Bath & Body Works Inc soared 21% to  $37.80 after the retailer of personal products including candles and fragrances lifted its annual estimate. 

Sales 

Third quarter sales declined 5% to $1.60 billion from $1.68 billion a year ago, but an increase of 46% from the quarter in 2019. 

Total U.S. and Canada store sales declined 4.8% to $1.17 billion from $1.23 billion a year ago. 

Direct U.S. and Canada sales, which includes online sales, fell 6.4% to $345.5 million from $369.3 million a year ago. 

International sales increased 9.6% to $80.8 million from $73.7 million a year ago. 

Margins 

Third quarter gross profit fell to $677.6 million from $838.7 million a year ago and gross margin declined  to 42.2% from 49.9% a year ago. 

Third quarter operating income decreased to $118.7 million from $226.9 million a year ago.  

Third quarter of 2021 included expense of $89.1 million pre-tax loss for the early extinguishment of outstanding notes. 

Operating margin fell to 12.6% from 24.3% from a year ago. 

Net income margin fell to 5.7% from 14.6% from a year ago. 

Earnings 

Third quarter operating income was $201.8 million compared to $408.5 million in the similar quarter in 2021. 

Net income from  continuing operations was $91.0 million compared to $177.1 million in the similar quarter in 2021 

Third quarter earnings per share were 40 cents, ahead of the guidance range between 10 cents and 20 cents, but lower than 66 cents a year ago.

In the third quarter, weighted diluted outstanding shares declined to 229.1 million from 267.0 million a year ago. 

Inventories 

Total net inventories at the end of the third quarter increased to $1.27 billion from $1.15 billion a year ago. 

Long Term Debt 

At the end of the third quarter, long-term debt was unchanged at $4.86 billion. 

Cash Flow 

In the third quarter, net operating cash flow plunged to $66.3 million from $448.0 million in the corresponding period in 2021. 

Capital expenditure increased to $252.2 million from $240.9 million a year ago. 

Free cash turned negative to 185.9 million from positive cash flow of 207.1 million. 

Outlook 

The company lifted its outlook for the full-year on continued strength in its operations. 

Fourth quarter sales are expected to decline in mid-single to low-double digits compared to $3.027 billion sales in 2021. 

Gross margin rate in the fourth quarter is estimated between 41% and 42% and for the full-year 2022 rate is estimated between 42% and 43%. 

The retailer estimated fourth quarter earnings from continuing  operations per diluted share between $1.45 and $1.65. 

For fiscal 2022, earnings from continuing operations per diluted  share are estimated between $3.00 and $3.20, revised higher from its previous estimate of $2.70 to $3.00.

Dividend and Stock Repurchase 

On November 4, the company declared a regular quarterly dividend of 20 cents a share payable on Dec. 2, 2022 to shareholders of record on Nov. 18, 2022.

Management Changes 

Gina Boswell will assume the role of chief executive officer, replacing interim-CEO Sarah Nash as of December. 

Store Network 

The company opened 66 new stores and closed 34 in the nine-months to October. 

The store network increased to 1,787 at the end of October 2022 from 1,755 at the end of January 2022.  

Selling square feet space in the U.S. and Canada is expected to increase to 5.02 million at the end of 2022 from 4.75 million in the beginning of 2022.   

Rate Path Anxieties Drag S&P 500 Index Again, Oil Falls 4%

Benchmark indexes opened lower after Fed officials stepped up hawkish stance against inflation campaign and crude oil dropped 4%.  

Eurozone Inflation Acceleration Slows, Auto Registrations Rise, Swiss Trade Surplus Up

European markets closed mixed after geopolitical tensions eased and focus shifted to rising coronavirus infections in China. 

European bond yields were in focus after the U.S. Fed officials carried out another round of campaign to cool down market expectations. 

Investors also reviewed the latest data on inflation in the eurozone and new card registrations. 

The yield on 10-year German Bunds inched slightly higher to 2.02%, French bonds edged higher to 2.50%, the UK Gilt traded unchanged at 3.2% and Italian bonds held at 3.19%.

The DAX index increased 0.2% to 14,266.38, the CAC-40 index declined 0.5% to 6,576.12 and the FTSE 100 index fell 4.65 points to 7,346.54. 

The euro edged up to $1.03 and the British pound inched lower to $1.183. 

Eurozone Inflation Accelerate Rate Revised Lower 

Eurozone consumer price inflation accelerated less than expected in October, Eurostat reported Thursday. 

The annual rate of inflation in October was lowered to 10.6% from the previous estimate of 10.7% and the inflation rose from 9.9% in September. 

Core rate of inflation, which excludes food, energy, tobacco and alcohol, increased to 5.0% from 4.8% in September. 

October Vehicle Registration Rises, 3rd Monthly Increase

New automobile registrations in October rose for the third month in a row, the Brussels-based ACEA reported Thursday. 

Passenger vehicle registrations rose 12.2% in October to 745,855 from 664,861 a year ago. Registration increased 9.6% in September from the previous month. 

Despite the monthly increase, registrations are down by 290,000 from the pre-pandemic 2019 levels. 

January to October registrations declined 8.1% to 7.53 million from a year ago. 

Swiss Exports Decline Accelerates 

Swiss exports declined for the second month in a row in October, the Federal Customs Administration reported Thursday. 

Exports declined 1.1% from a year ago to 22.94 billion Swiss francs and imports dropped 1.4% to 19.97 billion Swiss francs from a year ago.  

Exports declined 1.8% in real terms after adjusting for inflation, following a 0.4% fall in September. 

Trade surplus rose to 2.98 billion Swiss francs from 2.93 billion Swiss francs in the previous month. 

Watch exports growth moderated but still remained high at 6.7% from a year ago and increased to 2.3 billion Swiss francs. 

Oil Drops 3% 

Crude oil traded lower after rising coronavirus infections in China, the largest importer of oil, dashed aside any hopes of relaxing stricter mobility restrictions. 

Supply resumed after a brief power outage through a Russian pipeline to Hungary but traders were cautious as the European Union's ban for Russian crude oil is scheduled to start in December and OPEC is expected to keep supply in check. 

Brent crude fell 3.2% to $89.93 a barrel and TTF natural gas prices fell 1.1% to 112.54 euros a MWh. 

Europe Stock Movers 

Siemens AG soared 7.6% to

October Housing Starts Dropped 4.2% but Completions Rose

Housing market continues to slide downwards since the rise of the mortgage rate doubled in the year so far and jumped to the level last seen in 2001.

Housing starts in October declined 4.2% in October from the previous month to a seasonally adjusted annual rate of 1.425 million., the U.S. Census Bureau reported Thursday.

Compared to a year ago, housing starts fell 8.8%.

Single family housing starts fell 6.1% annual rate to 855,000 and starts for multi-family units decreased 0.5% to 556,000.

Building permits declined 2.4% to 1.56 million from 1.564 in September and dropped 10.1% from a year ago rate of 1.698 million. 

Seasonally adjusted housing completions in October fell 6.4% to annual rate of 1.339 million from the revised September estimate of 1.431 million. 

Completions are 6.6% from a year ago rate of 1.256 million.  

Continuing Jobless Claims at 8-month High

For the week ending November 12, initial jobless claims declined 4,000 to 222,000 .

The claims in the previous week were revised to 226,000., said the U.S. Department of Labor in its weekly report.

Continuing jobless claims rose to 1.507 million for the week ending on November 5 from the previous week's 1,494 million claims.

The continuing claims have jumped to the March 26 level of 1.529 million.

Despite the historic low level of insured unemployment rate, the government reported data understate the unemployed counts.

A number of states are still struggling with online systems where unemployed can file their jobless claims. 

For example, Florida's filing system for jobless claims is filled with glitches and malfunction that goes back to the pandemic era causing many to lose benefits for weeks.  

Movers: Bath & Body Works, Cisco, EZCorp, Kohl's, Macy's, Nvidia

Bath & Body Works Inc soared 21% to  $37.80 after the retailer of personal products including candles and fragrances lifted its annual estimate.

Third quarter earnings per share were 40 cents, ahead of the guidance range between 10 cents and 20 cents, but lower than 66 cents a year ago.

Cisco Systems gained 4.5% to $46.04 after the company reported better-than-expected quarterly results.

EZCorp declined 7.5% to $9.04  after the operator of pawn shops reported fiscal fourth quarter revenue increase 21% to $233.4 million from $192.4 million a year ago. 

Net income in the quarter increased to $7.3 million from $1.6 million and diluted earnings per share rose to 11 cents from 3 cents a year ago. 

Pawn loans outstanding increased 19% to a record-high of $210.0 million.

Kohl's Corporation gained 2.2% to $30.56  after the retailer withdrew its annual outlook citing macro headwinds and economic uncertainty and the recent departure of the chief executive Michelle Gass. 

Total revenue in the third quarter declined 7.2% to $4.3 billion from $4.6 billion a year ago. 

Third quarter net income plunged 60% to $97 million from $243 million and diluted earnings per share dropped to 83 cents from $1.65 a year ago. 

The company previously announced 50 cents a share dividend. 

Stock traded higher on the hopes that the chip demand will recover in the first quarter of 2023.

Macy's Inc soared 12.01% to $22.11 after the company said same store sales fell less than expected and quarterly results were ahead of expectations.

The retailer also lifted its annual outlook.

Nvidia Corporation declined 0.2% to $158.86 after the graphics chipmaker reported lower-than-expected revenue and earnings in its latest quarter.

Total revenue declined to $5.93 billion, down 17% from a year ago and down 12% from the previous quarter. 

Net income declined 72% to $680 million from $2.46 billion and diluted earnings per share dropped to 27 cents from 97 cents a year ago. 

The chip maker guided fourth quarter revenue of $6 billion with a band of 2%.