Private sector data is guiding markets higher for now. Will markets have sufficient data for more gains as economic forecasts remain cloudy?
Monday
S&P 500 1.23% | NASDAQ 1.86%
Another surge in big tech to start off the week. Markets are optimistic about trade talks and corporate earnings are proving to be strong for Q2. The 2-year Treasury Note auctioned at 3.5% (over 4% in Oct 2024) as a rate cut decision on Wednesday approaches.
Tuesday
S&P 500 0.23% | NASDAQ 0.80%
Retail Sales data has yet to be released due to the ongoing government shutdown. Corporate earnings from Visa (V) and PayPal (PYPL), however, showed that spending was stronger than expected in the 3rd quarter. These trends are expected to continue as seasonal spending kicks into gear.
Wednesday
S&P 500 0.00% | NASDAQ 0.55%
Gains in equities continued as the Federal Funds Rate was lowered by .25%, which was in line with expectations. Tech continues to invest in Artificial Intelligence (AI) with large portions of these companies using their coffers to fund development.
Thursday
S&P 500 0.99% | NASDAQ 1.57%
News of a truce, albeit temporary, with China resulted in markets turning lower. Both countries used leverage on rare earth metals and soybeans to open key trading channels for a year. Tech reversed course mainly due to the Federal Reserve Chairman stating that a December rate cut isn’t a done deal.
Friday
S&P 500 0.26% | NASDAQ 0.61%
Markets responded well on Friday to the news of cooling temperatures on trade. The major indexes climbed higher as large cap growth companies surged through the finish line for October.
Conclusion
S&P 500 0.71% | NASDAQ 2.24%
Markets edged higher with much of the heavy lifting, again, coming from tech companies this week. The government shutdown was not resolved ahead of the weekend. China-U.S. tensions eased as a 1-year deal was reached on tariffs from both sides. Most notable was the decision by the Federal Reserve to reduce the federal funds rate by .25%, which met expectations. The Thursday sell-off revolved around jitters left by comments of Chairman Powell that a December rate cut was “not a foregone conclusion”. If the economy is driving into the fog due to limited data, optimism was found in Consumer Confidence this week. Also, rate cuts move the short end of the yield curve lower as bond markets become more “normal”. A normal yield curve is when the 2-year treasury yield is lower than the 10-year treasury yield curve. It’s been over a year since the yield curve turned “normal”, seemingly averting any major economic downturn. Although the Federal Reserve is watching for economic slowing, supporting data is helping navigate through the 1st month of Q4.
~ Your Future… Our Services… Together~
Your interest in our articles helps us reach more people. To show your appreciation for this post, please “like” the article on one of the links below:
FOR MORE INFORMATION:
If you would like to receive this weekly article and other timely information follow us, here.
Always remember that while this is a week in review, this does not trigger or relate to trading activity on your account with Financial Future Services. Broad diversification across several asset classes with a long-term holding strategy is the best strategy in any market environment.
Any and all third-party posts or responses to this blog do not reflect the views of the firm and have not been reviewed by the firm for completeness or accuracy.