Market Recap: Stocks Show Mixed Performance as Post-Election Rally Cools
S&P 500, Dow, and Nasdaq Near Record Highs Amid Economic Data and Corporate Earnings
The U.S. stock market displayed a mixed performance on Thursday, November 14, 2024, as the post-election rally showed signs of cooling off. Investors digested recent economic data and corporate earnings reports while keeping an eye on upcoming market events. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all hovered near their record highs, reflecting the overall positive sentiment in the market.
Major Market Indexes: A Closer Look
As of the market close on Thursday:
1. The Dow Jones Industrial Average (DJIA) edged up 0.1% to 43,958.19.
2. The S&P 500 inched higher by 0.02% to 5,985.38.
3. The Nasdaq Composite slipped 0.3% to 19,230.72.
The slight gains in the Dow and S&P 500 were offset by a minor retreat in the tech-heavy Nasdaq, indicating a rotation of investor interest across different sectors.
Sector Performance and Market Breadth
Eight out of eleven broad sectors in the S&P 500 finished in positive territory. Notable performers included:
1. Consumer Discretionary (XLY): Up 0.9%
2. Real Estate (XLRE): Gained 0.8%
3. Energy (XLE): Advanced 0.8%
The market breadth leaned slightly negative, with decliners outnumbering advancers on both the NYSE and Nasdaq. The CBOE Volatility Index (VIX), often referred to as the market’s “fear gauge,” dropped 6.7% to 14.02, suggesting reduced investor anxiety.
Economic Data and Federal Reserve Outlook
Recent economic data, particularly the October Consumer Price Index (CPI), has played a crucial role in shaping market expectations regarding future Federal Reserve policy. The CPI for October increased by 0.2% month-over-month and 2.6% year-over-year, aligning with economists’ forecasts.
The core CPI, which excludes volatile food and energy prices, rose 0.3% for the month and maintained a 3.3% annual rate. This data has bolstered market participants’ expectations for potential interest rate cuts in the coming year.
Interest Rate Expectations and Treasury Yields
Following the CPI report, market sentiment has shifted significantly regarding the Federal Reserve’s next moves. The CME FedWatch tool now indicates an 83% probability of a 25 basis-point rate cut in December, up from less than 60% just a day prior. Investors are pricing in the possibility of a full 1% rate reduction throughout 2024, reflecting growing optimism about the Fed’s ability to manage inflation without stifling economic growth.
Corporate Earnings Highlights
Several companies reported notable earnings results:
1. Griffon Corp. (GFF): Reported Q4 fiscal 2024 earnings of $1.47 per share, beating estimates. The stock surged 18.2%.
2. Arcos Dorados Holdings Inc. (ARCO): Posted quarterly earnings of $0.17 per share, exceeding expectations. Shares rose 2.4%.
Upcoming Market Events to Watch
Investors should keep an eye on these upcoming events that could impact market movements:
1. Producer Price Index (PPI) release on Friday, November 15
2. Federal Reserve Chair Jerome Powell’s speech at the Dallas Regional Chamber later on Thursday
3. Continued analysis of the Republican Party’s control of both chambers of Congress and its potential impact on policy and markets
Market Outlook and Investor Sentiment
As the post-election rally shows signs of fatigue, market participants remain cautiously optimistic. The recent string of positive sessions, with the S&P 500 closing higher in six of the past seven trading days, underscores the resilience of the current bull market.
However, investors should remain vigilant, as factors such as inflation trends, Federal Reserve policy decisions, and geopolitical developments could introduce volatility in the coming weeks.
In conclusion, while the market’s momentum may be slowing, the overall trend remains positive. Investors are advised to stay informed about economic indicators, corporate earnings, and policy developments that could shape market dynamics in the near term.
