Weekly Market Commentary November 4th to November 8th 2024
The Federal Open Market Committee cut short-term interest rates by 25 basis points on Thursday, but the news was overshadowed by the sweeping election victories by the Republicans in both the White House and in Congress. The rate cut was expected, but the decisiveness of the election wasn’t. Both events lead to all-time highs in the equity markets with all three major indices up between 4.6%-5.7% on the week. The S&P 500 finishing at 5,996, the Dow Jones Industrials at 43,989, and the NASDAQ closed at 19,287. The Fed’s subsequent messaging following the cut was very vanilla in content but left the door open for another possible cut in December.
Elsewhere in the economy, it was a rather light week. The Institute for Supply Management (ISM) released their Services Index for October, and it was a big win. Anything over 50 is considered expansionary and a 53.8 was expected. The services sector has been strong lately but the actual print of 56.0 was still a pleasant surprise to the upside.
Weekly Initial Jobless Claims have been range-bound in the low 200 thousands recently and this week was no different, coming in at 221,000 which was as expected.
Consumer Confidence, as measured by the University of Michigan Consumer Sentiment Survey, came in at 73 for November when 71 was expected. This is not something we generally report on, but it’s important to note that it hasn’t been this high since last April.
Finally, in the fixed income markets, it was a wild ride for bonds but the longer end of the curve finished almost where it started. The 2-Year U.S. Treasury yield finished up 10 bps to close at 4.26%; the 10-Year hit as high as 4.48% mid-week but closed at 4.30%; and the 30-Year took a similar trajectory but eventually closed at 4.46%.
Key economic releases next week include October Consumer and Producer Prices (CPI and PPI), Retail Sales, and a variety of Fed speakers likely facing questions on future rate cuts and working with the incoming new administration.
