Weekly Market Commentary November 25th to November 29th 2024

Despite a holiday-shortened trading week, market participants received a full week’s worth of economic data. Core Personal Consumption Expenditures (PCE), the Federal Reserve’s preferred inflation gauge, rose by 0.2% for the month, reflecting a 12-month inflation rate of 2.3%. While this was in line with expectations, the annual rate showed an acceleration compared to the previous month. Services prices continued to be more persistent than goods, accounting for most of the month’s inflation with a 0.4% increase, while goods prices fell by 0.1%. Food prices remained largely unchanged, and energy prices dropped by 0.1%.

Despite the rise in inflation, traders were undeterred, increasing the odds of a 0.25% reduction in the Fed’s Funds Rate to 66%. This came after the release of the Federal Reserve Meeting Minutes, which expressed confidence that inflation is easing but the labor market remains strong. The Fed indicated it will continue rate cuts, but at a gradual pace. These minutes are in reference to the Fed’s November meeting that took place just two days after the election. The minutes did not reference the election or potential regulatory changes directly but instead highlighted the increased volatility in an uncertain environment.

New Single-Family Home Sales dropped 17.3% in October, falling to 610,000 units, primarily due to higher mortgage rates and increased material costs. The hurricanes also had a negative impact on sales, particularly in the Southern region. In the South, sales fell by 27.7%, and in the West, they decreased by 9%. However, the Northeast saw a significant increase of 53.3%. The median sale price of new homes in October was $437,300, reflecting a 4.7% year-over-year increase. Pending Home Sales marked their third consecutive monthly gain, rising 2.0% as an increase in housing inventory fueled stronger homebuying activity.

In a holiday-shortened trading session on Friday, both the Dow and S&P 500 reached new all-time highs. The S&P 500 closed at 6,032, while the Dow finished at 44,910. November proved to be the best month for stocks in 2024. Meanwhile, the 10-Year U.S. Treasury yield dropped from 4.41% to 4.18%, signaling a shift in trader sentiment, and the 2-Year yield fell to 4.17% from 4.38%.

Key economic releases next week include the Unemployment Report and PMI Manufacturing data.