Dow jumps more than 400 points after another report suggests inflation may be slowing

Biotechs have shown a lot of strength recently and are contributing to the health care sector’s broader performance in the fourth quarter, Mark Newton, head of technology strategy at Fundstrat Global Advisors, wrote in a note late Monday. Entitled “Biotech Breakthrough Value Follows as Healthcare Gets Stronger.”

The iShares Biotechnology ETF (IBB) has recently strengthened and exhibited a bullish chart pattern, Newton wrote, and is “a very positive development for biotech, which has been slowly building a base for most of this year. Short-term Inside, I expect IBB to push up to $140.80, with a high probability of hitting $149, which would be strong overhead resistance.”

Big biotech stocks that have performed strongly recently include: MRNA, AMGN, GILD, BIIB. Meanwhile, “former leaders” including VRTX and REGN “remain fairly strong technically and should be able to participate given Monday’s breakthrough.”

Finally, the IBB has broken out against the Big Pharma ETF (PPH), iShares US Medical Devices ETF (IHI), and the SPDR S&P Health Care Services ETF (XHS), and thus, “is the strongest sub-industry group in healthcare right now, That should last until December, Newton said.

— Scott Schniper

Stocks opened higher on Tuesday after an index of agricultural commodity prices for October suggested that inflation may be slowing.

The Dow Jones Industrial Average opened about 300 points higher, or 0.9%. The S&P 500 rose 1.6 percent and the Nasdaq Composite rose 2.4 percent.

— Tanaya Marshall

Wharton finance professor Jeremy Siegel said Tuesday on CNBC’s “Squawk Box” that October’s weaker-than-expected producer price index suggests the Fed’s “recognition day” may be worse than Expected to come sooner.

“I think it raises the pivot,” he said. “All we need is for them to realize what the actual price is doing, they’re not up. They could be up 50 basis points, but that should be an absolute pause.”

Siegel also told CNBC that 10-year Treasury yields may have peaked and the S&P should not retest lows from earlier this year.

— Samantha Subin

The producer price index, which measures wholesale inflation, rose 0.2% month-on-month in October. Economists polled by Dow Jones expected growth of 0.4%.

The report came less than a week after a consumer price index report also showed a weaker-than-expected increase, fueling optimism that inflation may be slowing.

— Jeff Cox

These are some of the companies ahead of the market open on Monday:

• Getty Images — Getty Images slumped 11.8% premarket after its quarterly revenue fell short of Wall Street expectations, though the visual content marketplace operator does see top earnings.
• TSMC – TSMC traded in after-hours trading after Berkshire Hathaway disclosed in a SEC filing that it bought more than $4.1 billion in the chipmaker’s stock in the third quarter. rose 10.9%.
• Energizer Holdings — The maker of batteries for Energizer and Rayovac surged 10% in premarket trading after quarterly results beat expectations. The results came despite what Energizer said was an unstable and headwinding operating environment.

See the full list of top gainers here.

— Peter Sacknow, Tanaya Macheel

Walmart and Home Depot kicked off their week of retail results Tuesday morning.

Walmart shares surged about 7 percent in early trading after the company raised its full-year guidance. It also beat Wall Street earnings and sales expectations.

Meanwhile, Home Depot’s sales and revenue topped analysts’ expectations, and its earnings beat expectations. However, it kept its full-year guidance, with shares down 1% premarket.

– George Manesis, Tanaya Marshall

Jefferies thinks it’s harder than investors think Harley-Davidson Expand its user base.

“In short, we lack confidence in the future demand trajectory of the heavy-duty motorcycle segment,” the company said in a note to clients, noting that recent “retail inflection points lack support.”

Harley-Davidson shares fell 1.7 percent premarket.

CNBC Pro subscribers can read more here.

— Alex Haring

Netflix shares rose more than 2% in premarket trading after Bank of America upgraded the streaming giant to buy from underperform.

Analyst Jessica Reif Ehrlich said in a note: “While secondary growth has slowed, we see significant conversions through value-oriented ad tiers and password sharers. Efforts to improve monetization could drive operational/financial upside.”

CNBC Pro subscribers can read more here.

— Alex Haring

credit suisse announced Tuesday that it will accelerate the restructuring of its investment bank by selling a significant portion of its securitized products group (SPG) to Apollo Global Management.

The deal, along with possible sales of other assets to third-party investors, is expected to reduce SPG’s assets from about $75 billion to $20 billion, Credit Suisse said.

The bank said the move represented “an important step towards a managed exit from the securitized product business, which is expected to significantly de-risk the investment bank and free up capital to invest in Credit Suisse’s core business.”

Read the full story here.

– Elliott Smith

European markets were cautious on Tuesday as investors assessed the economic outlook for the region and the wider global economy.

pan european Stoke 600 Early trade was flat, with utilities up 0.8 percent, while telecoms fell 0.4 percent.

Market sentiment was subdued after comments from Federal Reserve leaders Lyle Brainard and Chris Waller about raising interest rates rattled U.S. markets on Monday.

– Elliott Smith

According to Morningstar, with many stocks in a bear market, stocks may be undervalued by 15%.

The equity research firm’s chief U.S. strategist believes headwinds that emerged earlier this year will start to fade early next year and favor stocks.

Dave Sekera also shared his “fair value” assessment of six companies with “broad economic moats” that would do well in such an economic environment.

CNBC Pro subscribers can read more here.

— Ganesh Rao

China’s industrial production rose 5% year-on-year in October, down from a 6.3% rise in September. The latest figure was below the 5.2 percent growth forecast in a Reuters poll.

Separately, China’s October retail sales fell 0.5% YoY, lower than expected.

Analysts polled by Reuters had forecast retail sales rising 1 percent in September and retail sales rising 2.5 percent.

— Abigail Wu

Which stocks would benefit if China scrapped its zero-Covid policy? As China eases some virus containment measures, market experts reveal how to reopen.

Professional subscribers can read more here.

— Xavier On

Two major retailers report earnings on Tuesday morning, giving investors more insight into their quarters and how consumers are responding to the threat of high inflation and a weakening economy.

Walmart and Home Depot are both due to report earnings early Tuesday. Analysts expected Walmart to report earnings of $1.32 a share on revenue of $147.75 billion, according to Refinitiv data. Home Depot is expected to earn $4.12 per share on revenue of $37.96 billion.

Later this week, Target, Lowe’s, Macy’s, Kohl’s and Gap will also report their latest results.

— Carmen Reinick

Shares of the blank-check company, which said it plans to merge with former President Donald Trump’s social media company Trump Media and Technology Group, rose 11% on Monday ahead of the former president’s scheduled announcement on Tuesday.

Digital World Acquisition special acquisition company (SPAC) is up more than 66% so far this month.

The SPAC announced in October 2021 that it would merge with former President Donald Trump’s social media company Trump Media and Technology Group, but has so far failed to secure the support it needs. Another shareholder vote is scheduled for later in November.

Additionally, the company is trying to extend the deadline to close the Trump Media acquisition to September 8, 2023. The SPAC is still down more than 46% year-to-date.

-Carmen Reinicke, Gina Frankola

Stock futures rose late on Monday, recouping some of their losses during the daily session, snapping a two-day winning streak that began after last week’s better-than-expected inflation report.

Futures tied to the Dow Jones Industrial Average rose 72 points, or 0.18%. S&P 500 futures and Nasdaq 100 futures were up 0.25% and 0.33%, respectively.

— Carmen Reinick