Fed chief nominee Powell doesn't rock the boat in confirmation hearing
The stock market retreated from record territory Tuesday after North Korea tested a missile for the first time since September, setting off worries that it is a step closer to its intended goal of putting U.S. in striking distance.
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Earlier, all three main indexes had traded at fresh highs on upbeat economic data and as Jerome Powell, President Donald Trump's pick to run the Federal Reserve, indicated he wouldn't make drastic changes to central bank policy.
What are the main benchmarks doing?
The Dow Jones Industrial Average advanced 114 points, or 0.5%, to 23,695. The S&P 500 added 13 points, or 0.5%, to 2,615. The Nasdaq Composite Index was up 5 points to 6,884. All three indexes were well off record highs set earlier in the session.
The three equity benchmarks have set multiple records in 2017, boosted by factors such as an expanding U.S. economy, rising corporate profits, anemic expected returns for other assets and bets that the Trump administration will deliver tax cuts and other business-friendly policies.
What's driving markets?
North Korea fired a ballistic missile around 3 a.m. local time (http://www.foxnews.com/world/2017/11/28/north-korea-fires-ballistic-missile-south-korea-officials-say.html?link=mktw) which is believed to have landed in the water between Korea and Japan. In retaliation, South Korea has launched a "precision strike" missile exercise, according to Korean and U.S. news reports.
Stateside, Powell testified at a Senate confirmation hearing (http://www.marketwatch.com/story/meet-the-next-fed-boss-same-as-the-old-boss-jerome-powell-to-face-senate-glare-2017-11-26) Tuesday morning, giving investors their first big clue on how he hopes to operate at the Fed. His opening statement for the hearing was released Monday, indicating he expects to stay on the course (http://www.marketwatch.com/story/powell-to-testify-fed-will-continue-to-hike-interest-rates-shrink-the-balance-sheet-2017-11-27) set by the current Fed chief, Janet Yellen.
Read MarketWatch's live blog of the confirmation hearing (http://blogs.marketwatch.com/capitolreport/2017/11/28/live-blog-and-video-of-jerome-powell-confirmation-hearing/)
In a speech Tuesday, New York Fed President William Dudley called for the public reporting of Treasury market transactions (http://www.marketwatch.com/story/ny-fed-chief-calls-for-public-reporting-of-treasury-market-transactions-2017-11-28).
Late Monday, Dudley said he still expects a strong job market will help push inflation up over time, and he repeated his view that low inflation with low unemployment is "not actually a bad thing (http://www.marketwatch.com/story/feds-dudley-expects-strong-job-market-will-eventually-boost-inflation-2017-11-27)."
Check out:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
On the data front, the Conference Board's consumer-confidence index jumped to 129.5 in November, well above the 124.8 forecast from economists polled by MarketWatch and marking a 17-year high (http://www.marketwatch.com/story/feeling-good-consumer-confidence-hits-17-year-high-2017-11-28).
The advanced U.S. trade deficit in goods rose 6.5% to $68.3 billion in October (http://www.marketwatch.com/story/us-trade-deficit-surges-in-october-advanced-report-shows-2017-11-28). Separately, home prices rose at their fastest pace in more than three years in September (http://www.marketwatch.com/story/house-prices-rise-at-fastest-pace-since-june-2014-case-shiller-says-2017-11-28).
Read:Bond traders don't care about nonfarm payrolls anymore (http://www.marketwatch.com/story/bond-traders-dont-care-about-nonfarm-payrolls-anymore-in-one-chart-2017-11-27)
Stocks shrugged off the cancellation of a meeting between Trump and congressional leaders, including top Senate Democrat Chuck Schumer and top House Democrat Nancy Pelosi after the president tweeted that he didn't see prospects for a deal to avoid a government shutdown on Dec. 8.
What are strategists saying?
Despite the market's retreat, Ian Winer, head of the equities division at Wedbush Securities, played down investors' reaction to the missile test.
"I don't think anyone views this as a threat and I am not seeing any supply. It just feels like the buyers stepped away for a few minutes," he said.
Meanwhile, Powell's impact on the market was even more muted.
"[Powell's] testimony emphasized his five years of FOMC experience as qualification for the role and we fully expect the Senate will confirm him. Based on his comments today, we see no reason to change our forecast that the Fed will raise rates in December and then a further four times next year. As Powell said, the case for a December rate hike is 'coming together,'" said Michael Pearce, U.S. economist at Capital Economics, in a note.
"This is a strong market that continues to grind up, and I expect the market will continue to move higher throughout the end of the year. The market is very comfortable with valuations here, and so long as earnings continue to move up, I don't see that changing," said Wayne Kaufman, chief market analyst at Phoenix Financial Services.
"Good earnings and strong economic data" continue to be the main focus for investors, said Art Hogan, chief market strategist for Wunderlich.
Hogan said market participants appear confident congressional leaders will seek to avert a government shutdown ahead of midterm elections in 2018, noting that recent shutdown showdowns have resulted in deals.
Which stocks are key movers?
Shares in Buffalo Wild Wings Inc.(BWLD) climbed 6.3% after Arby's Restaurant Group Inc., which is owned by private-equity firm Roark Capital Group, agreed to acquire the restaurant chain (http://www.marketwatch.com/story/roark-backed-arbys-to-buy-buffalo-wild-wings-in-deal-valued-at-29-billion-including-debt-2017-11-28) for $157 a share in a deal valued at $2.9 billion, including debt.
Shares in Amazon.com Inc.(AMZN) rose 0.2% as investors assessed how the e-commerce giant performed on Cyber Monday. Adobe data have indicated this year's Cyber Monday sales set a record (http://www.marketwatch.com/story/cyber-monday-expected-to-be-largest-online-sales-day-ever-with-659-billion-spent-adobe-2017-11-28). The SPDR S&P Retail ETF (XRT) was up 1.3%.
Wells Fargo & Co.'s stock (WFC) rose 1.6%. Earlier, it was reported that the bank overcharged foreign-exchange clients (http://www.marketwatch.com/story/wells-fargo-overcharged-hundreds-of-business-clients-report-2017-11-27).
Bon-Ton Stores Inc. (BONT) jumped 6.8% after the retailer reported its November same-store sales rose 3.1% this month (http://www.marketwatch.com/story/bon-ton-stores-shares-spike-after-november-sales-rise-2017-11-28).
What are other assets doing?
European stocks (http://www.marketwatch.com/story/oil-stocks-drive-european-stocks-higher-as-shell-strikes-upbeat-tone-2017-11-28) traded higher, while Asian markets closed mixed (http://www.marketwatch.com/story/asian-markets-mixed-as-investors-keep-wary-eye-on-chinese-stocks-2017-11-27). Oil futures (http://www.marketwatch.com/story/oil-prices-move-lower-as-doubts-creep-in-over-opec-outcome-2017-11-28) continued to pull back, as some analysts voiced doubts over what a Thursday meeting of key producers will achieve. The ICE U.S. Dollar Index (http://www.marketwatch.com/story/dollar-rises-as-traders-wait-to-see-if-feds-powell-will-give-hawkish-hints-2017-11-28) edged higher, and gold futures (http://www.marketwatch.com/story/gold-tips-higher-ahead-of-feds-powell-confirmation-hearing-2017-11-28) were roughly unchanged.
--Ryan Vlastelica and Victor Reklaitis contributed to this article.
(END) Dow Jones Newswires
November 28, 2017 14:42 ET (19:42 GMT)