Stocks Rise After CME Mess, Erasing November Loss: Markets Wrap

(Bloomberg) — US stocks advanced in thin trading after a technical outage at the Chicago Mercantile Exchange disrupted premarket activity. Bonds edged lower.

The S&P 500 rose 0.5% in a post-holiday shortened session and was back within spitting distance of all-time highs. Volume was more than 25% below the 30-day average as Friday trading closed at 1:00 p.m. Earlier, a data-center fault had affected multiple markets, with the issue lasting longer than a similar outage in 2019. The Nasdaq 100 rose 0.8% with Intel Corp. among its biggest gainers. Amazon.com Inc. shares gained 1.8% and Walmart Inc. hit a record on what’s traditionally one of the biggest US shopping days of the year.

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Foreign-exchange markets, which had continued to traded throughout the day, saw no major volatility after the EBS platform reopened at 7:00 a.m.

“The spillover from the Thanksgiving holiday and the fact there is no US data may on the face of it lessen the impact,” said Daniel Noorian, head of execution and quantitative services at Liquidnet.

The CME halt was caused by a cooling system malfunction at a data center in the Chicago area, according to facility operator CyrusOne.

“Some market participants will take advantage of possible differences in prices,” said Guillermo Hernandez Sampere, head of trading at asset manager MPPM. “The majority will pause trading for risk reasons until the issues are resolved, otherwise losses are possible.”

For US stocks, expectations that the Federal Reserve will cut interest rates faster than initially anticipated fueled a late-month rebound.

The biggest weekly advance in five months capped off a choppy November after swollen technology stock valuations stirred up unease on Wall Street. The gain buoyed the broader barometer of US stocks as it notched a seven-month winning streak. But investors rotating away from artificial intelligence winners and into defensive sectors like health care led the tech-heavy Nasdaq 100 to log its first monthly loss since March.

The broader US stocks gauge had been down as much as 4.7% in November barely more than a week ago, as worries over stretched technology valuations rattled traders. Money markets were assigning roughly an 80% chance of a Fed cut in December before the CME disruption hit.

“For now, the data supports the soft landing, and that contributed to the continued equity rally ahead of Thanksgiving,” wrote Tom Essaye of the Sevens Report. “However, there remain a lot of economic unknowns right now and there are simmering risks that the economy is not as strong as investors believe given the lack of government data in recent months.”

Essaye said there could be risk-off money flows in December if upcoming data disappoint. Next week, statistics-starved investors will be watching for Challenger, Gray & Christmas job cuts and ADP’s private-payrolls reports as well as a reading of the Fed’s favored inflation gauge on Friday.

Moves across global equities were muted amid thin volumes. Europe’s Stoxx 600 edged up 0.2%, while an Asian gauge trimmed gains after a four-day rally. Yield on the 10-year Treasury rose to 4.02% while the dollar held steady.

In commodities, oil was on track for a fourth monthly decline as traders looked ahead to this weekend’s OPEC+ meeting and assessed how a possible Ukraine peace agreement might influence an already oversupplied market.

Gold traders faced a volatile session as the CME outage rippled through trading. The disruption affected activity across contracts including gold futures and Comex options, often used to hedge exposure to London prices. Spot bullion resumed a climb as trading was restored, advancing more than 1%.

What Bloomberg Strategists Say…

Gold’s main drivers — central-bank buying, Fed rate cuts, a weaker dollar, concerns about the US central bank’s independence, and a loyal crew of ETF holders — all remain in place. There’s also concern in the background about swelling debt burdens in several developed economies and, by extension, the standing of fiat currencies.

— Jake Lloyd-Smith Energy and Commodities Editor, Singapore

Some of the main moves in markets:

Stocks

The S&P 500 rose 0.5% as of 1 p.m. New York time The Nasdaq 100 rose 0.8% The Dow Jones Industrial Average rose 0.6% The MSCI World Index rose 0.5% Currencies

The Bloomberg Dollar Spot Index fell 0.1% The euro was little changed at $1.1602 The British pound was little changed at $1.3235 The Japanese yen was little changed at 156.23 per dollar Cryptocurrencies

Bitcoin fell 0.8% to $90,683.7 Ether rose 0.1% to $3,037.02 Bonds

The yield on 10-year Treasuries advanced three basis points to 4.02% Germany’s 10-year yield was little changed at 2.69% Britain’s 10-year yield declined one basis point to 4.44% Commodities

West Texas Intermediate crude rose 1.4% to $59.47 a barrel Spot gold rose 1.4% to $4,217.17 an ounce This story was produced with the assistance of Bloomberg Automation.on.

–With assistance from Subrat Patnaik, James Hirai, Sujata Rao, Macarena Muñoz and Christian Dass.

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