Stocks continued November’s race higher, however this week was a little different.
Healthcare and Consumer Staples were sector leaders, rising 2.08 and 1.30% respectively. For the year however, they continue to trail the S&P 500. Year-to-date, Healthcare is down (3.80%), Consumer Staples, down (4.64%).
Many have suggested the stock market rally cannot continue without participation from the other stocks, not named Nvidia, Apple, Microsoft, Alphabet, Meta, and Tesla. Last week market participation continued to widen. Typically, good news.
For the shortened trading week, the Dow moved higher 1.19%, the S&P 500 .93%, the Nasdaq .80%, and the Russell 2000 .50%. Foreign stocks and Emerging markets finished higher by .91% and .49%.
Bond remained range bound, with the 10-year US Treasury finishing the week with a yield of 4.472%. Rates holding in this range are an indication investors are believing the Fed may be done raising rates and the economy is gradually slowing. Lower rates are also serving as a tailwind to stocks, as the yield fell quickly from 4.988% on October 19th.
On the Commodity front, Oil is down (5.49%) for the year, closing last Friday @ 75.18. Natural gas, very quietly, is down (35.91%) in 2023. Interesting!!!
This Week
With earnings season in the rear-view, perhaps the most important data point will be Thursday, when the Personal Consumption Index (PCE) is released. As we’re aware, this is the number the Fed’s gives most credibility for reading inflation.
Consensus is for a 3.5% number, down from 3.7% last month.
Consumer spending will be an important part of the PCE as many are looking for clues to see if the economy is truly slowing.
Housing will also be debated as reports on New Home Sales and Pending Home Sales will be released. No secret, what’s going on here.
One More Fed Meeting
Federal Reserve Chair Powell has been viewed by many as a stock-market rally killer.
For the remainder of 2023, we have one more Federal Reserve meeting on interest rates, December 12th and 13th. In addition, I’m sure we’ll hear several Fed members speaking weekly on their views of the economy and inflation.
The Fed is in a challenging situation. Will inflation continue to moderate, or will it resurge at some point? The Fed will remain on guard for any signs of a resurgence.
Let’s hope inflation continues its slow pace of moderation with no comeback.
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