Stocks rose Tuesday morning as worries over Covid cases in China kept investor sentiment in check during a short week of trading for the Thanksgiving holiday.
The Dow Jones Industrial Average climbed 190 points, or 0.56%. The S&P 500 and the Nasdaq Composite advanced 0.54% and 0.37%. Shares of Best Buy popped nearly 9% after the company hiked its 2023 fiscal outlook and beat earnings expectations.
China saw its first deaths in the mainland from Covid since May over the weekend. It prompted fears among investors that the country could bring back restrictions meant to slow virus spread, which would hurt business.
The news out of China pushed investors away from growth stocks Monday and toward defensive sectors like health care and utilities, said David Waddell, CEO of Waddell & Associates. He said it also led to "reflexive" U.S. dollar buying, which gave bond yields upward pressure.
"On low volume days like today, the market gets Pavlovian," he said. "If you want to make sense of this market, watch the dollar.
Stocks are coming off a down session, with the Dow losing 45 points, while the S&P 500 and Nasdaq Composite slid 0.4% and 1.1%, respectively. Losses on the Dow were kept in check by a 6.3% gain in Disney following the return of Bob Iger as CEO.
On Tuesday, several Federal Reserve officials are set to speak, including Kansas City Fed President Esther George and St. Louis Fed President James Bullard.
Economic reports due out include the Philadelphia Fed's nonmanufacturing business outlook survey and the Richmond Fed's manufacturing index.
Investors are also watching for earnings reports from Dollar Tree, Best Buy, HP and Nordstrom. The stock market will be closed on Thursday for the Thanksgiving holiday and will close early on Friday.
Stocks rise at market open Tuesday
Stocks jumped at the open of the trading day on Tuesday as Wall Street shook off worries of covid lockdowns in China and looked to some solid earnings reports.
The Dow Jones Industrial Average climbed 190 points, or 0.56%. The S&P 500 and the Nasdaq Composite advanced 0.54% and 0.37%.
Shares of Best Buy popped nearly 9% after the company hiked its 2023 fiscal outlook and beat earnings expectations.
Buy Walgreens as it grows its health care business, Cowen says in upgrade
Cowen upgraded shares of Walgreens Boots Alliance, saying the stock offers an attractive risk-reward and can rally more than 30% from here.
"While execution remains a risk, particularly given the macro environment, WBA's current valuation already discounts this risk, with shares at only 8.7x CY23 EPS and 6.9x CY23 EBITDA," wrote analyst Charles Rhyee in a note to clients. "We view the risk/reward as very attractive, and believe investors should take the risk, given near-term support from 4.8% dividend yield."
The stock added nearly 2% before the bell Tuesday.
Read more on the upgrade from Cowen here.
— Samantha Subin
JPMorgan upgrades Toll Brothers, says stock trades cheap compared to peers
JPMorgan upgraded shares of Toll Brothers to an overweight from a neutral rating, saying in a note to clients Tuesday that the stock trades at a solid discount to its homebuilding peers.
Analyst Michael Rehaut said that Toll Brothers is "inexpensive relative to our outlook for roughly average gross margins and only moderately below average ROE versus its larger caps in 2023 and 2024," noting that the company trades at a price-to-book discount to its competitors.
Shares rose 3% in the premarket.
CNBC Pro subscribers can read more on the call here.
— Samantha Subin
Best Buy, Dicks Sporting Goods and more - biggest premarket stock moves
A number of stocks are moving in premarket trading due to earnings and more.
Best Buy -- Shares of the company surged after an earnings beat and a boosted 2023 fiscal outlook.
Dick's Sporting Goods -- Shares initially spiked on a revenue and profit beat, as well as better-than-expected sales in the third quarter and a raised guidance, but later fell.
Abercrombie & Fitch -- The retail stock jumped nearly 13% on its earnings beat.
Wall Street cuts price targets for Zoom Video after weak guidance
Shares of Zoom Video fell about 9% in premarket trading after delivering weak guidance for the fourth quarter.
The video conferencing company reported a better-than-expected $1.07 in adjusted earnings per share for the third quarter, but that didn't win over Wall Street analysts. Several cut their price targets for Zoom last night and this morning.
"We struggle to find a near-term upside catalyst, with the Online business likely pressured the next several quarters, and our estimates implying further downside risk to street revenue numbers from here," wrote Deutsche Bank analyst Matthew Niknam, who lowered his price target on the stock to $75 per share from $95.
Piper Sandler, MoffettNathanson, Mizuho, UBS and Wells Fargo also cut their price targets on Zoom Video.
MoffettNathanson analyst Sterling Auty, in lowering his price target to $80 from $85, said Zoom's "turn is still quarters away."
"There are breadcrumbs being laid to get a sense of when the overall growth of the business might inflect, and, if all goes well, that is still three quarters into the future. However, it is not completely clear if a worsening macro environment (layoffs) would extend the timeline to a turn, or just result in a lower growth rate prior to the turn," Auty said in a note to clients.
— Jesse Pound, Michael Bloom
Stock picking opportunities are bullish for the market, Wilson says
One of the top strategists on Wall Street says the next boom cycle for stocks won't look like the top-heavy run of the last decade but instead be a rich environment for stock pickers.
Morgan Stanley chief U.S. equity strategist Mike Wilson said Tuesday that, while he expects the S&P 500 to fall from here before bottoming in 2023, stocks are starting to separate from one another in a preview of the next sustained rally.
"Probably one of the most bullish things we see going forward is it's not going to be a stock market of 10 stocks any more. There's going to be more opportunities. It's going to be more democratic across the stock market," Wilson said on "Squawk Box."
"That doesn't mean it's going to be easy as a stock picker, but there's going to be many more participants. The breadth is improving. And that's what we're seeing," he added.
Wilson released his 2023 outlook last week. Read more about his forecast on CNBC Pro.
— Jesse Pound
Best Buy jumps after raising full-year guidance
Best Buy shares popped more than 7% in the premarket after the electronics retailer hiked its fiscal 2023 outlook.
"We are updating our FY23 outlook to flow through our better-than-expected Q3 results while keeping our Q4 expectations unchanged," CFO Matt Bilunas said. "We now expect comparable sales to decline approximately 10% and our non-GAAP operating income rate2 to be slightly higher than 4.0%."
The company also posted fiscal third-quarter earnings and revenue that beat analyst expectations.
— Fred Imbert
Carvana gets another downgrade
Analysts continued bailing on Carvana, with Cowen being the latest firm to downgrade the used car seller. Cowen lowered its rating on the stock to market perform from outperform and slashed its price target to $10 from $55.
"CVNA has not met '22 profit targets while carrying a significant debt load," the firm wrote, adding that it now estimates the company won't achieve EBITDA profitability until 2024. "Overall, we are less confident in CVNA's timeline for reaching positive free cash flow."
Carvana shares have plummeted 97% in 2022.
— Sam Subin
European markets cautiously higher as investors assess economic fears
European markets were fractionally higher on Tuesday as investors in the region tracked concerns among their U.S. and Asia-Pacific counterparts over China's tightening of Covid restrictions, which are continuing to pressure output.
The pan-European Stoxx 600 was up 0.3% in early trade. Oil and gas stocks added 3.2% after Saudi Arabia denied a report that OPEC+ may boost oil output, while tech stocks slid 0.5%.
- Elliot Smith
CNBC Pro: Morgan Stanley's Wilson says inflation is set to slide, but warns of a 'new era' ahead
Morgan Stanley's Chief U.S. Equity Strategist Mike Wilson said he expects a "pretty steep decline in inflation," and predicts when this could happen.
But he said there are two areas that are exceptions, where inflation could be "stickier."
— Weizhen Tan
CNBC Pro: Amazon's down 40% this year — is it time to buy? Market pros give their take
Once a Wall Street darling, Amazon has lost some of its luster this year. The e-commerce giant's stock has fallen more than 40%, well underperforming the S&P 500, which has declined about 15% in the same period.
Is it time for investors to pile back in? Two market pros faced off on CNBC's "Street Signs Asia" on Thursday to make a case for and against buying the stock.
— Zavier Ong
Oil hits lows not seen since January in Monday trading
Crude oil dropped to prices not see since January in Monday trading.
West Texas Intermediate was down 0.4% to $79.73 per barrel after hitting a low of $75.08. That hasn't been hit since Jan. 3, when it traded as low as $74.27.
Brent lost 0.2%, ending at $87.45 after moving as low as $82.31. It was the lowest level since Jan. 11.
Prices for both have cooled since jumping earlier this year with the Russian invasion of Ukraine.
— Alex Harring
Stocks making the biggest moves after hours
These are the stocks making the biggest moves after hours:Zoom – The pandemic darling slid 4.4% after giving a weak outlook for the fourth quarter despite topping expectations for earnings and revenue.Dell – The technology company popped as much as 6% after it beat anticipated revenue and earnings per share in its third quarter.Urban Outfitters – Shares went up 2.6% after reporting better-than-expected revenue growth in its latest quarter, despite earnings per share falling a penny short of estimates.
— Alex Harring
Stock futures open near flat
Stock futures opened near flat Monday night.
Futures for the Dow were down 0.01%.
S&P 500 futures lost 0.01%, while Nasdaq 100 futures added 0.01%.
— Alex Harring