Markets came back down to earth this week. Is this a sign of a pullback or are we back to business as usual?
Monday S&P 500 0.10% | NASDAQ 0.06%
Markets were semi-flat on Veterans Day following a large upswing the week before; however, the S&P 500 managed to close at an all-time. Little economic data was released for the day.
Tuesday S&P 500 -0.29% | NASDAQ -0.09%
Volatility measures have fallen meaningfully since the 3rd week of October and forward guidance on growth has become increasingly supportive of continued momentum. Small Business optimism showed signs of improvement, but the markets couldn’t hold on to the previous session’s highs, falling into the close.
Wednesday S&P 500 0.02% | NASDAQ -0.26%
Consumer Price Index information was released on Wednesday indicating a stagnation in current price movement with a slight uptick. Bets of a rate cut in December have lowered in the last month as the Federal Reserve walks a tight rope of balancing healthy growth while preventing the economy from overheating again.
Thursday S&P 500 -0.60% | NASDAQ -0.64%
Jobless claims came in lower than expected as the labor market remains strong, supported by trends in seasonal hiring. The tech-heavy NASDAQ fell after the recent post-election runup.
Friday S&P 500 -1.32% | NASDAQ -2.24%
Retail Sales came in positively for October as we look ahead to Thanksgiving and Black Friday. Markets can often interpret strong economic data as bad news, and the slide continued to end the week in the red. Commentary from the Federal Reserve alluded to a cautious approach to continued rate cuts if the economy remains strong.
Conclusion S&P 500 -2.08% | NASDAQ -3.15%
This is the season to be grateful and the markets have enjoyed the runup as of late. The fall through mid-November may be no more than a test of whether recent spikes are sustainable over the near-term. Corporate Earnings, Federal Interest Rate Cut Decisions, Inflation, Consumer Confidence, and the labor market all seem to be vying for answers on the trajectory of the economy. If the economic engine runs too hot, there are risks of overheating and that lends itself to a more cautious Federal Reserve regarding interest rates. It is too early to tell if that is truly the case. If all other factors are plugged into the forecasts, there are opportunities and risks that present themselves, but this week’s performance reinforced the reality that there can be shorter-lived bumps in market optimism followed by tempered expectations. There is a solid outlook to finish off the year considering the seasonal growth trends. The markets did fall back to earth this week but with the low volatility recently, there appears to not be significant turbulence on the near-term horizon through the end of 2024.
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