Stocks Seeing Pressure Following Data

U.S. stocks are lower as the new week kicks off, even as China took further measures to ease COVID restrictions. The global markets are digesting a host of November services sector reports that suggested activity around the globe is mostly slowing, but U.S. output surprisingly accelerated. In other economic news, factory orders grew at a faster pace than expected. The data appears to be fostering uncertainty regarding how aggressive the Fed may be next week with its monetary policy decision. Treasury yields are gaining ground, and the U.S. dollar has reversed to the upside. Crude oil prices are choppy after OPEC+ left its production target unchanged, and new restrictions on Russian oil kick in, including an imposed $60 per barrel price cap on Russian oil from the G-7. Gold prices are seeing noticeable pressure. Equity news is relatively light, but Science Applications International topped earnings estimates, and raised its guidance, though V.F. Corp lowered its 2023 outlook. Asia finished mixed, but mainland China and Hong Kong markets rallied, and European stocks are diverging.

At 10:58 a.m. ET, the Dow Jones Industrial Average is down 0.6%, while the S&P 500 Index and the Nasdaq Composite are decreasing 0.9%. WTI crude oil is ticking $0.15 higher to $80.13 per barrel, and Brent crude oil is rising $0.34 at $85.91 per barrel. The gold spot price is trading $19.20 lower to $1,790.40 per ounce, and the Dollar Index is advancing 0.3% to 104.83.

Science Applications International Corp. (SAIC $116) reported adjusted Q3 earnings-per-share (EPS) of $1.90, above the $1.73 FactSet estimate, as revenues rose 1.0% year-over-year (y/y) to $1.91 billion, slightly topping the $1.86 billion that the Street had anticipated. The science, engineering, and technology application consulting services company noted momentum in new business capture and on-contract growth during the quarter. SAIC raised its full-year guidance. Shares are trading solidly higher.

V.F. Corporation (VFC $31) lowered its 2023 guidance, citing the impact of weaker-than-anticipated consumer demand across its categories, notably in North America, which is resulting in a more elevated-than-expected promotional environment. VFC also named Benno Dorer as its interim President and CEO. Shares are trading noticeably to the downside

As the curtain comes down on Q3 earnings season, Schwab's Chief Investment Strategist Liz Ann Sonders discusses in her article, Disappearing Act: Earnings, how earnings weakness is starting to materialize across a broader swath of industries, with hits coming from a strong dollar, weaker demand, and aggressive monetary policy.

November services sector activity reports top forecasts

The Institute for Supply Management (ISM) Services Index (chart) for November showed an unexpected acceleration in growth (a reading above 50) for the key services sector. The index increased to 56.5, compared to the Bloomberg consensus estimate of a decline 53.5 from October's 54.4 reading. Business activity jumped above the 60 level, and employment also expanded. Prices dipped but remained elevated at 70.0.