Stocks close higher

The S&P 500 closed out its best week since June, adding 5.9% this week, amid hopes that the Federal Reserve would soon slow its tightening campaign.

The broader market index added 0.9% on Friday. The Nasdaq Composite added 1.9% as investors snapped up tech shares on hopes interest rates would ease. The Dow Jones Industrial Average gained 0.1%.

— Sarah Min

Citigroup shares pop 10% since Thursday on weaker dollar

Citigroup shares gained more than 10% over the past two trading sessions after signs of cooling inflation led to a drop in the U.S. dollar.

The bank’s stock rose 3.7% on Friday, following a 6.8% gain in the previous session, which was triggered by Thursday’s better-than-expected CPI report. The dollar was headed for its biggest two-day drop since 2009.

Citigroup, led by CEO Jane Fraser, is the most global of large U.S. banks, even after announcing plans to exit at least 13 markets. The weakening dollar reduces pressure on emerging markets and makes overseas revenue more valuable.

“The past two days, we’ve seen a big relief rally in stocks resulting from lower interest rate expectations and the weakening dollar,” said JMP securities analyst Devin Ryan. “That’s been more pronounced in companies with significant businesses outside of the US. Citigroup generated more than two-thirds of its revenue outside the U.S.”

Citigroup’s rise exceeds that of rival lenders, which are more focused on U.S. retail and business customers. The 24-company KBW Bank Index rose 6.8% since Thursday.

Shares of the New York-based bank are still down 17% this year.

—Hugh Son

It would be a ‘mistake’ to go back to the old market leaders such as tech, Strategas says

Strategas’ Chris Verrone warns investors against returning to the old market leaders such as tech, saying they remain “broken” even as this week’s rally prompted a pivot into stocks most hit by surging inflation and interest rates.

“It’s so tempting to want to go back to the old leaders, to go back to the top of the market, the techs, the Apples,” Verrone said Friday on CNBC’s “Closing Bell.” “I think that would be the mistake here.”

Instead, Verrone said investors should look to some of the sectors that have already outperformed in 2022. He said energy could demand a larger weighting in the index from here, and recommended adding to financials.

— Sarah Min

Citi warns of a difficult holiday season for Foot Locker without Yeezys

Citi opened a negative catalyst watch on Foot Locker, warning of a difficult holiday season ahead for the retailer given its reliance on Yeezys.

Analyst Paul Lejuez lowered his fourth-quarter and fiscal year 2023 estimates, and reduced his price target, saying there are challenges ahead for Foot Locker even if beats expectations in its third quarter earnings report later this month.

“We anticipate a modest EPS beat in 3Q (BMO 11/18). However, the focus will be on 4Q guidance given Adi’s decision to cut ties with the Yeezy brand,” Lejuez wrote in a Friday note.

The brand came under pressure after Ye, formerly known as Kanye West, made antisemitic comments that prompted Adidas and other companies to cut ties with the rapper. According to Lejuez, Foot Locker “leaned into its partnership” with Adidas to offset a loss with Nike, as the latter ramped up its direct to consumer business.

“Our checks suggest there will be no Yeezy product in stores in 4Q (FL stores boxed up the products and sent them back to Adidas). That means FL is going into the all-important holiday qtr (when the highest proportion of Yeezy/Jordan launch activity takes place) with significantly fewer Jordan Retros and no Yeezys,” he wrote.

“We believe this will be significant headwind to 4Q comps,” he wrote.

The analyst lowered his price target to $33 from $38. It’s about in line with where shares were trading Friday.

— Sarah Min, Michael Bloom

Stocks rise to session highs in afternoon trading

Stocks climbed to session highs with the S&P 500 up 1.05%, as of 2:35 p.m. ET.

The Dow Jones Industrial Average rose 0.12%, after trading in negative territory for the better part of the day. The Nasdaq Composite jumped 2.03%.

— Sarah Min

Netflix’s ad tier off to a solid start, JPMorgan says

Investors may have been too pessimistic on Netflix in recent weeks as the company rolled out advertising for the first time, according to JPMorgan.

In a note to clients on Thursday night, analyst Doug Anmuth pointed out that Netflix has given back a lot of its post-earnings pop even though its new advertising tier appears to be off to a good start.

“Our initial time with the ad tier suggests NFLX is attracting a diverse advertiser base – including CPGs, retailers, leisure companies, & luxury brands – & hundreds of advertisers are already onboard,” Anmuth said.

Some investors are concerned that the new advertising tier could lure users from more expensive subscriptions without delivering more revenue for Netflix, but Anmuth said he is more optimistic.

“We’re encouraged that Basic With Ads (BWA) unit economics should be at least neutral w/Basic across all markets, and we believe significantly accretive in large ad markets such as the US, w/even greater positive impact to revenue and operating profit,” Anmuth added.

Shares of Netflix rose about 4.9% on Friday.

— Jesse Pound, Michael Bloom

Aerospace and defense stocks take big leg lower Friday on Ukraine success and BoA downgrade

Pick your poison.

Was it because Ukraine successfully reoccupied the regional capital Kherson, and the Chairman of the Joint Chiefs of Staff General Mark Milley said, “We think there are some possibilities here for some diplomatic solutions.”

Was it because President Biden meets China’s President Xi Jinping on the sidelines of the UN climate conference Monday in Bali, where they’ll no doubt discuss Taiwan as well as Russia?

Or was it Bank of America analyst Ronald Epstein on Friday downgrading shipbuilder Huntington Ingalls and aircraft parts maker Spirit AeroSystems to underperform and L3Harris to neutral? Depending on the contractor, Epstein variously blamed limited growth (HII), less chance of meeting a free cash flow target (SPR) and supply chain snafus lasting into 2024 (LHX).

For any or all of those reasons, defense and aerospace stocks tumbled Friday.

L3Harris Technologies lost as much as 7.8% intraday, Huntington dropped 7.4%, Northrop Grumman (NOC) slid 6.4%, Spirit Aero declined 5.4%, Raytheon Technologies (RTX) fell 5.2% and Lockheed Martin (LMT) slumped 5%.

Losses were smaller among more diversified ETFs: iShares US Aerospace & Defense (ITA) weakened 3% intraday, Invesco Aerospace & Defense (PPA) gave up as much as 2.4% and SPDR S&P Aerospace & Defense (XAR) was off 1.4%.

— Scott Schnipper

Citi exits its short position on the S&P 500

Citi has decided to exit its short position on the S&P 500 as markets rally.

The Citi Global Macro Strategy team said there are few negative catalysts hanging over markets through the year-end, as stocks get a boost from a possible reopening in China, as well as a return to risk-on sentiment.

“In truth, it’s difficult to find any bearish catalysts between now and the December payrolls, FOMC, CPI,” Jamie Fahy wrote in a Thursday note.

“This doesn’t mean that we think equities are all of a sudden in a bull-market again. EPS is a major risk in 1H 2023, but over the next 2-6 weeks, the market can painfully squeeze for the bears. We take small profit in our short position.”

— Sarah Min, Michael Bloom

Stocks making the biggest moves midday

Check out the companies making headlines in midday trading.

  • Doximity – The online platform for medical professionals skyrocketed more than 27% after the company reported better-than-expected quarterly results and announced a share-repurchasing program.
  • Coinbase – Coinbase jumped 9% after Piper Sandler reiterated its overweigh rating on the stock, calling it well positioned to “weather a prolonged crypto winter.” The call comes as the crypto industry faces turmoil due to the sudden collapse of the popular FTX exchange.
  • Duolingo – Shares of the foreign language learning platform dropped 10% after the company reported revenue below expectations while also posting a smaller-than-expected quarterly loss. Meanwhile, Duolingo bumped its full-year outlook.
  • GSK — Shares of the pharmaceutical company dropped 6.2% after GSK said Friday it would not use of an ovarian cancer drug in the United States for certain patients with consumer mutations, according to Reuters. It also got downgraded to neutral by UBS because of its “unattractive earnings scenario.”

See the full list here.

— Alex Harring

‘Short-term’ setback caused by FTX fallout could be good for crypto long-term, JPMorgan says

The crypto industry is suffering a major blow after the collapse of FTX and revelations around the company’s mismanagement of customer funds. The damage comes right as crypto investors gave in to the idea that the worst of the bear market could be behind them. But although there are likely further losses to be realized, the unfortunate event could be a blessing in disguise for much sought after crypto regulation, JPMorgan analysts said in a note Friday.

“While this is certainly a major short-term setback, we see the widely publicized collapse of FTX as potentially dramatically accelerating the timeline to which crypto-related regulation will be ushered in (similar to new banking regulation which followed the global financial crisis),” the note said.

“As a result, we see the news surrounding FTX as one step back, but one that could prove to be the catalyst to move the crypto economy two steps forward (further unlocking the utility value of blockchain)…” the analysts added. “Moreover, while the news of the collapse of FTX is empowering crypto skeptics, we would point out that all of the recent collapses in the crypto ecosystem have been from centralized players and not from decentralized protocols.”

— Tanaya Macheel

Market likely to re-test the lows, Cashin says

Thursday’s big move higher was likely a bear market rally, Art Cashin told CNBC on Friday.

“I still think we probably will go back and re-test the lows. Yesterday’s rally was borderline miraculous. … But, not to rain on the parade, you have to remember that rallies in bear markets are short, sharp and die in low volume,” the UBS director of floor operations said on “Squawk on the Street.”

Check out Cashin’s full interview on CNBC Pro.

— Jesse Pound

Dollar index hits lowest level since August

The dollar index hit its lowest level since August on Friday, falling to a fresh low of 106.594. That’s the lowest point since Aug. 18 when the index dropped to 106.505.

The dollar index dropped 3.8% this week, on pace for its worst performance since the week ending Mar. 27, 2020 when it fell 4.33%.

— Sarah Min, Gina Francolla

S&P 500 is on pace for its best week since June

As of Friday morning, the S&P 500 is up more than 5% this week, meaning the index is on track for its best week since the one ended June 24 this year.

— Sarah Min

Amazon cost-cutting review important for investors, analysts say

Amazon is in the midst of a broad cost-cutting review that could bring down a hammer on its Alexa unit as well as other unprofitable parts of the company, according to a Wall Street Journal article.

Investors in the stock should take note, analysts say.

“We think this is important for the stock as investors were both disappointed by the limited scope of retail cost efficiency targets in 3Q (only $1.5bn) and then more disappointed by Amazon falling short of this goal,” wrote Bank of America analyst Justin Post in a Thursday note. He added that Amazon has a hiring freeze in place for some businesses, and employees of unprofitable units have been encouraged to look for jobs elsewhere in the company.

It also hints at a shift in focus towards costs for mega-cap tech stocks, which could be a positive thing for investors.

“This is important symbolically as it is the second mega cap tech company this week (after META’s official announcement ) to evaluate how to better manage cash flow through a potentially morechallenging’23…while also investing to maintain leadership in ’24 and beyond,” wrote Morgan Stanley analyst Brian Nowak in a Friday note.

Nowak estimates that Amazon has spent $10 billion to $15 billion per hear on other bets, and that a 10% reduction could drive $1 billion or 5% to 2023 earnings before interest. The firm reiterated its overweight rating and $140 price target.

Bank of America agrees that better cost efficiency could benefit the stock.

“The WSJ has suggested that this cost review could be bigger than 2017, and anything that brings the 5% US retail margins from 2018 back as an achievable target (vs -1% est. in 2022) would likely be positive for the stock,” said Post. He also reiterated his buy rating and $137 price target.

Shares of Amazon are up nearly 4% in midday trading Friday.

—Carmen Reinicke

UnitedHealth, Merck drag on the Dow

Shares of UnitedHealth and Merck dragged on the Dow Jones Industrial Average, which was down 136 points, or 0.4%, Friday morning. UnitedHealth dropped 5.4%, and Merck declined 4%.

— Sarah Min

Consumer sentiment shows steep decline in November

Consumers grew less optimistic in November despite signs that inflation could be leveling off.

The University of Michigan Consumer Sentiment survey, a closely watched gauge on Wall Street, fell to 54.7 for the month, down from 59.9 in October and the lowest reading since July. The drop represented an 8.7% monthly decline and an 18.8% plunge from a year ago, according to the first reading of the survey Friday. Two more revisions follow.

One-year inflation expectations rose to 5.1%, the highest reading since July, while the five-year outlook moved up to 3%, the highest since June.

The future expectations index also showed a steep decline for the six-month outlook, falling to 52.7 from 56.2 in October. Current conditions fell 11.9%, to 57.8 from 65.6, and that sub-index is down 21.5% from a year ago.

The survey comes the day after the Bureau of Labor Statistics said the consumer price index rose 0.4% in October, below the Dow Jones estimate of 0.6%. That set off a wild rally in Wall Street the pushed up the Dow Jones Industrial Average by 1,200 points.

—Jeff Cox

Thursday’s Nasdaq gain was one of its best since 1971

Thursday was a big day for stocks, with all three major indices surging on a better-than-expected October CPI report.

The Nasdaq had a particularly good day, jumping 7.4%. That’s a historical leap – it ranks in the top 20 days for the tech-heavy index going back to 1971, according to data from Liz Ann Sonders, chief investment strategist at Charles Schwab.

The data also shows that these outsized moves are more prevalent during bear market cycles, like the one U.S. stocks are currently in.

“Of those largest moves, 16 were during bear markets,” Sonders tweeted.

—Carmen Reinicke

Energy, materials outperform the S&P 500, health care lags

Energy and materials stocks led gains in the S&P 500 during Friday morning trading, with each sector up 3.2% and 1.9%.

Energy stocks such as Devon Energy, Halliburton, and Occidental Petroleum were each trading more than 4% higher.

Health care, consumer staples and utilities were the only sectors trading in negative territory. They were down 2.1%, 1.4% and 0.8%, respectively.

Eight out of 11 sectors in the S&P 500 were trading higher. The broader market index was up 0.3%.

— Sarah Min

The S&P 500 posted its biggest outperformance against the Dow since 2001, BTIG says

It was a historic day Thursday for the major averages, with the S&P 500 advancing more than 5% for the first time since since 2020, and posting its biggest outperformance against the the Dow since 2001, according to BTIG.

Regardless, BTIG’s Jonathan Krinsky remained skeptical.

“While these are clearly positives and could open the door for the SPX to test ~4,083 (9/13 gap-fill and 200 DMA), Thursday’s action alone is insufficient evidence to change our primary cautious view,” he wrote in a Friday note.

Investors should remember that the biggest bear market rallies occur during bear markets, a point that Krinsky underscored with historical data.

“[The] Nasdaq 100 (NDX) gained 7.49%. Of the 20 largest NDX daily gains since 1990, 16 of them happened either between April 2000 and May 2002, or in October 2008, none of which marked the end of those bear markets,” he wrote.

— Sarah Min

Stocks open little changed

Stocks opened little changed Friday after posting their biggest one-day rally since 2020.

The Dow Jones Industrial Average and the S&P 500 was flat, and the Nasdaq Composite dipped 0.32%.

— Sarah Min

Crypto prices fall as FTX announces bankruptcy

Cryptocurrencies are under pressure again after FTX announced that it is filing for bankruptcy, and that its CEO Sam Bankman-Fried has resigned.

Bitcoin dropped more than 6% to $16,458. Ether dropped more than 7%.

The move also appeared to weigh on the equity market. Nasdaq 100 futures gave up gains in the final minutes before the market opened, and the Nasdaq Composite was down slightly in early trading.

— Jesse Pound

Casino operators jump in the premarket

Casino stocks that have a high exposure to China advanced on the news that the country was easing some Covid measures. Wynn Resorts and Las Vegas Sands were up more than 4% and 3% in the Friday premarket.

— Sarah Min

Stocks making the biggest moves premarket

Check out the companies making headlines before the bell:

  • Walgreens (WBA) – The pharmacy chain operator’s stock added 1.5% in the premarket after Deutsche Bank upgraded the stock to buy from hold. Following a recent meeting with management, the firm said it is increasingly confident in Walgreens’ strategy to transition to a healthcare services company.
  • Intel (INTC) – The chip maker’s stock was rated underweight in resumed coverage at JPMorgan Chase following a restriction period, compared with its most recent rating of overweight. JPMorgan said Intel will participate in an overall industry rebound, but at a slower pace due to competitive pressures. Intel fell 2% in premarket action.
  • US Bancorp (USB) – Warren Buffett’s Berkshire Hathaway has sold more than 91 million shares of US Bancorp since the start of the year, according to a regulatory filing. Berkshire now owns just over 53 million shares, a 3.6% stake.

Read the full list here.

— Peter Schacknow

U.S.-listed Chinese stocks rise after China lifts some Covid restrictions

Shares of U.S.-listed Chinese stocks popped in Friday premarket trading after China announced that it would pull back on some Covid restrictions, and shortened quarantine time for international travelers by two days.

Shares of surged 8% in the premarket, while Alibaba was up 4.8%. Shares of Pinduoduo were 5.2% higher, while Baidu jumped 3.2%.

— Sarah Min

Intel falls after JPMorgan double downgrade

Intel shares dipped more than 2% in the premarket after JPMorgan double downgraded the chipmaker to underweight from overweight. Analysts at the bank cited increasing competition from rivals such as AMD and Taiwan Semiconductor for the rating change.

CNBC Pro subscribers can read more here.

— Alex Harring

European markets climb on U.S. inflation reading, China’s easing of Covid measures

Oil prices rise more than 2% on back of China easing quarantine measures

China trims Covid quarantine time by two days

Chinese state media announced on Friday that the country will reduce quarantine time for international travelers by two days.

The revised rules state travelers will be required to stay at a quarantine facility for five days, shorter than the previous period of seven days, with a three day period of home observation.

— Evelyn Cheng, Lee Ying Shan

Correction: This post was updated to accurately reflect the duration of home observation to three days.

CNBC Pro: Bitcoin will fall further, says fund manager — until this one catalyst kicks in

Bitcoin is down by 75% from its all-time high, and a cryptocurrency exchange is on the brink of bankruptcy. In such an environment, a bond fund manager reveals the one thing that’s needed for prices to rally.

Michael Howell from Cross Border Capital also said that due to the missing catalyst, there’s an increased risk of investors getting in a “bit too early.”

CNBC Pro subscribers can read more here.

— Ganesh Rao

Toast shares rise after hours

Shares of the restaurant point of sale system Toast popped about 8% in extended trading on Thursday evening after the company reported better-than-expected revenue for the third quarter.

Toast posted $752 million in quarterly revenue, while analysts were looking for $720 million, according to FactSet. It also raised current quarter and full-year revenue guidance.

— Tanaya Macheel

Tech sector could see ‘recessionary conditions,’ says SoFi’s Young

While it’s possible the economy averts a recession, the market could see recessionary conditions in certain sectors even if they don’t bleed into the overall economy – one of those sectors is tech, says SoFi chief investment strategist Liz Young.

“As the typical sequence goes, markets fall first, then earnings contract, and the economy breaks last in a recessionary environment,” Young said in a note. “Three of the big tech names — Apple, Amazon, and Microsoft — have announced hiring freezes at least through the end of the year. Many other companies have announced layoffs and I expect these headlines to keep coming for a while.”

She added that with the tech sector down 30% this year, this is an attractive entry point for long-term investors, but that she still expect one more market flush before the end of the bear market.

“Remember, markets bottom before the economy,” she said. “Even if we do have a 2023 recession, by the time we’re in it or know about it, the market has likely already started to recover.”

— Tanaya Macheel

Stock futures open higher

Stock futures opened slightly higher on Thursday night after better-than-feared inflation data fueled a broad market rally.

Futures tied to the Dow Jones Industrial Average added 77 points, or 0.23%. S&P 500 futures and Nasdaq 100 futures gained 0.28% and 0.33%, respectively.

— Tanaya Macheel

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