By Ben Norris, CFA, Senior Investment Strategist, Vice President
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Major stock indices closed the week higher, recovering some of the previous week’s losses, despite ongoing uncertainty about the policies of the incoming Trump administration and rising geopolitical tensions due to the Russia-Ukraine conflict. The week saw broad-based gains, with smaller-cap indexes outperforming larger-caps, and an equal-weighted version of the S&P 500 Index (SPX) surpassing its traditional capitalization-weighted counterpart. By the end of the week, SPX had gained 1.7%, while the small-cap focused Russell 2000 (RUT) gained 4.5%, and the NASDAQ Composite rose just under 1.8%. Year-to-date, the SPX is up nearly 27%, while RUT’s recent surge has led to a gain of just over 20%. Similarly, Bitcoin continued its post-election rally as investors bet that regulatory burdens will subside under the Trump administration. The cryptocurrency marked its third consecutive week with a gain of over 10% and approached the closely watched $100,000 mark for the first time.
With a light economic calendar for the week, attention shifted to NVIDIA’s third-quarter earnings report on Wednesday. The company’s shares ended the week mostly unchanged, as investors appeared satisfied with the results, despite the fourth-quarter guidance coming in lower than some analysts had anticipated. The utilities sector saw stronger performance, partly driven by optimism about rising demand for clean energy tied to artificial intelligence, as discussed during NVIDIA’s earnings call. On the other hand, communication services stocks lagged, partially due to a drop in Alphabet’s (formerly Google) shares following reports that the Justice Department had proposed breaking up the technology giant.
On Thursday, the Department of Labor reported an unexpected decline in initial jobless claims for the week ending Nov. 16, which helped bolster investor sentiment as the week drew to a close. Unemployment benefit claims fell to 213,000, down 6,000 from the previous week and the lowest since April. While continuing claims reached a three-year high of 1.91 million, some of this increase was attributed to the secondary effects of the recently resolved machinist strike at aircraft manufacturer Boeing. In addition, investors were encouraged by a report from the National Association of Realtors showing a year-over-year increase in existing home sales for October, the first such gain since July 2021. The positive report highlighted factors such as job growth, ongoing economic expansion and stabilizing mortgage rates (potentially lower rates going forward), all contributing to a recovery in housing demand.
Elsewhere, the focus remained largely on the Federal Reserve’s upcoming December meeting as investors awaited indications on the pace of potential interest rate cuts. In a speech on Wednesday, Federal Reserve Governor Lisa Cook stated that “the disinflationary process is continuing” and expressed her belief that short-term interest rates should trend lower. However, she emphasized that the timing and scale of rate cuts would depend on inflation and labor market data. Fed speakers have recently adopted a more hawkish tone, indicating that they are now equally focused on the labor market and inflation pressures as risks become more balanced.
U.S. Treasuries posted positive returns leading into Friday, with mixed movement across the yield curve. Short-term yields rose from the prior week, while long-term yields fell. (Bond prices and yields move inversely.) Municipal bond yields were slightly lower across most of the curve on Friday, coinciding with periods of falling Treasury yields. However, traders noted that demand for municipal bonds was concentrated in the primary market, with some new issues being oversubscribed by as much as 20 times. Weekly new-issue volumes were elevated as deals moved forward to avoid the Thanksgiving-shortened week.
The third-quarter earnings season is nearly concluded following NVIDIA’s report last week with FactSet reporting that more than 95% of the S&P 500 reported results as of Friday. Seventy-five percent of companies reported earnings results that were better than consensus estimates, below the five-year average of 77% but still a solid result given the uncertain economic environment. The blended year-over-year earnings growth rate for the index came in at 5.4%, which is not astounding by historical measurements, but still indicative of healthy corporate fundamentals. This marks the fifth consecutive quarter of positive year-over-year earnings growth for the index. Most recent consensus projections show continued growth in 2025, where continued earnings strength will be key to support a somewhat stretched equity market.
The coming week will feature a truncated slate of economic data to be reported before the Thanksgiving holiday. Federal Open Market Committee (FOMC) minutes are scheduled for release on Tuesday afternoon. The FOMC cut rates by 0.25% at the last meeting and traders will look to the minutes for clues that committee members could be preparing to slow the pace of rate cuts in the coming months. Wednesday will see a cornucopia of data released, with both the first revision to third-quarter GDP and the Personal Consumption Expenditures Price Index (PCE) likely to garner the bulk of investor attention. GDP growth has remained steady in recent reports, but any sign of slowing growth could lead the FOMC to reconsider their rate projections. Similarly, a higher or lower-than-expected inflation reading has the potential to move FOMC policy and markets. I hope you all have a wonderful Thanksgiving; we will see you again in mid-December as we plan to take the week of Dec. 2 off.
| TIME (ET) | REPORT | PERIOD | MEDIAN FORECAST | PREVIOUS |
| MONDAY, NOV. 25 | ||||
| None Scheduled | ||||
| TUESDAY, NOV. 26 | ||||
| 9:00 am | S&P Case-Shiller Home Price Index | Sept. | 5.2% | |
| 10:00 am | Consumer Confidence | Nov. | 113.0 | 108.7 |
| 10:00 am | New Home Sales | Oct. | 720,000 | 738,000 |
| 2:00 pm | FOMC Minutes (November Meeting) | |||
| WED., NOV. 27 | ||||
| 8:30 am | Initial Jobless Claims | Nov. 23 | 215,000 | 213,000 |
| 8:30 am | Durable Goods Orders | Oct. | 0.5% | -0.7% |
| 8:30 am | GDP (first revision) | Q3 | 2.8% | 2.8% |
| 10:00 am | Personal Income | Oct. | 0.3% | 0.3% |
| 10:00 am | Personal Spending | Oct. | 0.4% | 0.5% |
| 10:00 am | PCE Price Index (y/y) | Oct. | 2.3% | 2.1% |
| 10:00 am | Core PCE Price Index (y/y) | Oct. | 2.8% | 2.7% |
| 10:00 am | Pending Home Sales | Oct. | 1.8% | 7.4% |
| THURSDAY, NOV. 28 | ||||
| None Scheduled – Thanksgiving | ||||
| FRIDAY, NOV. 29 | ||||
| None Scheduled |
Links to previously published commentaries can be found at benjaminfedwards.com/Latest Investment Insights/Market Commentary/Market