Dow jumps 300 points as investors bet rising rates and inflation to ease into year-end

Hurt most by a sharp drawdown in Zoom Video, the WisdomTree Cloud Computing ETF (WCLD) has recovered from an early morning loss of some 6.6% and was lower by a little less than 1% in early afternoon trading.

Zoom (ZM) remains 4.9% lower — but earlier was off by 10.4%. Similarly, Paypal (PYPL) is down about 2% after sliding as much as 5.7%.

RingCentral (RNG) hasn’t rebounded as much, but has recovered a bit, dropping 4% after earlier falling 5.7%.

Zoom brought on much of the sector’s latest woes. Late Monday, the pandemic/work-from-home darling gave investors a light forward earnings forecast and CEO Eric Yuan said on the conference call it’s seeing “heightened deal scrutiny for new business.”

— Scott Schnipper, Gina Francolla

Saudi Arabia’s equities exchange will close Wednesday after it was named a national holiday recognizing the country’s win in a match against Argentina during the World Cup.

King Salman issued the decree announcing the holiday for employees in the public and private sector after the country’s team upset Argentina with a 2-1 win.

Argentina’s team is ranked third in the world by FIFA and includes Lionel Messi, who many consider to be one of the best players in the world. Saudi Arabia is ranked 51st.

The exchange will reopen Thursday.

— Alex Harring

Tuesday was a big day for retail earnings and the main takeaway is that there are surprisingly few big misses in the bunch.

On the whole, performance has been helped by better-than-expected sales and margins that have held up well. A look through Refinitiv’s same-store sales summary also shows there really weren’t many significant misses for this important retail sales metric. Although the environment certainly is promotional, it doesn’t seem like retailers are offering massive fire-sale price cuts.

With Q3 just about in the books, the attention turns to the holiday season and how Q4 estimates will fare in the weeks to come. Retailers have been cautious in their outlooks, but they’re refraining from entirely downbeat forecasts. The message seems to be that despite lingering macro concerns, shopping patterns should be somewhat normal this holiday season, with the biggest activity concentrated during Black Friday and Cyber Monday weekend and then peaking again in the days leading up to Christmas.

Big stock moves today from American Eagle Outfitters (up 17.9%), Burlington Stores (up 17.5%), Best Buy (up 11.7%), Dick’s Sporting Goods (up 9%) and Urban Outfitters (up 4.9%)

On the downside is Dollar Tree (down 9%), which is seeing some pressure on its margins, prompting it to guide to the low end of its earlier forecast.

—Robert Hum, Christina Cheddar Berk

Oil prices have been whipsawed this week ahead of OPEC+ Dec. 4 meeting, where it will give a further update on output. Prices slipped 5% Monday after a Wall Street Journal report said the group had considered a production hike of 500,000 barrels, which Saudi Arabia later denied.

In addition, Saudi Arabia said the group may further cut output.

“While there are a host of reasons weighing on oil prices, trading December crude oil futures was this week, and ended on November 21, which added to volatility,” wrote Quincy Krosby, chief global strategist for LPL Financial. “As in any trading session involving contract expirations and futures, especially when holiday-related volume decreases, volatility is typically heightened.”

There is also worry that interest rates, ticking up globally, will lead to recession and hurt demand. The recent uptick of covid cases in China hasn’t helped, as it’s likely set back a reopening of the country that would’ve boosted demand.

There are more hurdles to come.

“Following the December 4 meeting, a European Union ban on Russian crude imports will begin. In addition, a G7 plan to limit Russia’s gains from oil exports, is due to go into effect,” said Krosby. “The plan has placed a price cap on the exports, and there are growing worries that Russia could soon retaliate because oil revenue is the major funding source for its military campaign against Ukraine.”

—Carmen Reinicke

Nineteen stocks in the S&P 500 hit 52-week highs so far Tuesday and, of those, 16 (84%) also touched all-time highs. Three of the 19 (TRV, MRK, IBM) are also in the Dow Jones Industrial Average, and two of those are among the all-time highs:

• General Parts Co. (GPC), highest since a 1948 IPO
• O’Reilly Auto (ORLY), all-time high since 1993 IPO
• TJX Cos. (TJX), all-time high back to 1987 IPO
• General Mills (GIS), all-time highs back through history dating from 1927
• Monster Beverage (MNST), all-time high back to predecessor’s Nasdaq listing in 1992
• Pepsico (PEP), highest ever, going back to Pepsi-Cola’s merger with Frito-Lay in 1965
• Marathon Petroleum (MPC), all-time high back to spinoff from Marathon Oil in 2011
• Aflac Inc. (AFL), all-time back through CNBC data history in 1973
• Arthur J Gallagher (AJG), all-time high back to 1984 IPO
• Globe Life (GL), all-time high back to predecessor’s data in 1980
• MetLife (MET), all-time high back to going public in 2000
• Progressive (PGR), all-time high back to 1971 IPO
• Travelers (TRV), all-time high back to spin-off from Citi in 2002
• Gilead Sciences (GILD), highest since April 2020
• Merck & Co. (MRK), all-time high back through CNBC history starting in 1978
• PACCAR (PCAR), all-time high back to 1971 IPO
• Quanta Services (PWR), all-time high back to 1998 IPO
• Snap-On (SNA), highest since June 2021
• International Business Machines (IBM), highest since Feb. 2020

There were two 52-week lows in the S&P 500 early Tuesday:

• Tesla (TSLA), lowest since Nov. 2020
• Medtronic (MDT), lowest since March 2020

No comment.

— Scott Schnipper and Christopher Hayes

Goldman Sachs is expecting zero earnings growth in 2023 and a flat year for stocks, with the S&P 500 ending the year at 4,000. That price target is just over 1% from Monday’s close.

While the firm currently expects a soft landing from the Federal Reserve, there is a risk of a hard landing and recession, said David Kostin, Goldman’s chief U.S. equity strategist.

“The combination of a flat return under our base case and large downside in a recession means investors should remain cautious,” he wrote in a note Monday.

Therefore he recommends tilting portfolios toward defensive sectors with low interest-rate risk, like consumer staples, and looking at stocks that are leveraged to decelerating inflation.

To see his stock picks and other sectors he likes, read this CNBC Pro story.

— Michelle Fox

Honeywell has underappreciated technology angles and growth potential, according to JPMorgan.

There are a number of reasons for the call, including a management presentation that goes “against the narrative that this $2.3 B business is merely commodity ‘fossil’ exposure,” analyst Stephen Tusa Jr. wrote in a note Monday.

That presentation showed the company’s performance materials and technologies business group, UOP, is not a static refining-based technology, he said. A majority of the catalyst business is petrochem, which is higher margin and more differentiated, he added.

The most underappreciated is its sustainability technology solutions (STS) unit, which is growing and is a “prime example” of highly unique niches in which Honeywell should maintain differentiation over the long term, Tusa said.

“For the stock, it’s true that on FCF it’s already re-rated, but the favorable end market exposure, HON-specific drivers set to sustain, and a balance sheet that lends safety on defense and growth and transformation on offense are all key to justifying the multiple,” he wrote.

Shares of Honeywell are up about 4% year to date.

The S&P 500 energy sector jumped more than 2%, on pace for its biggest one-day gain since Nov. 11, to lead the broader market index higher. Materials also rose more than 1%.

Real estate was the laggard, sliding about 0.1%.

— Fred Imbert

Bank of America names Costco a top pick because of rising food inflation, and expects shares have further upside from here.

“We expect high food inflation to drive continued share gains for the warehouse club channel (including Costco) given the strong value proposition and price positioning on overlapping SKUs vs. mass and traditional grocery,” analyst Robert Ohmes wrote in a Tuesday note.

CNBC Pro subscribers can read the full story here.

— Sarah Min

Amazon stock may soon be set up for some reprieve after slumping more than 44% year to date, according to Thomas Champion at Piper Sandler.

“First, the company has embarked on a headcount reduction,” Champion wrote in a Tuesday note. “he peer signal is clear: on average, the companies in our coverage who have cut headcount this year are up ~8% since the announcement, handily outperforming the S&P.”

The stock’s underperformance this year may have put it in a solid position for a rebound as well.

“As of mid-November, AMZN’s 1YR return in the stock is a ~50% decline,” he said. “Prior periods of significant dislocation in the stock have yielded compelling F12M returns.”

Even though the company’s latest earnings report showed slowing AWS growth, it appears to be an industry-wide trend, according to Champion. AWS remains an industry leader in cloud and is well-positioned to withstand a potential recession.

The firm lowered some of its earnings estimates slightly but reiterated its overweight rating and bullish outlook on Amazon.

—Carmen Reinicke

Cathie Wood’s Ark Next Generation Internet ETF (ARKW) added 176,945 shares of the Grayscale Bitcoin…