Stock Market Today: Indexes Retreat as Fed Signals Caution on Rate Cuts
Market Performance on November 15, 2024
The stock market experienced a downturn on Friday, November 15, 2024, as investors digested recent comments from Federal Reserve Chair Jerome Powell and awaited key economic data. The S&P 500 (SPY) slipped 0.51%, the Dow Jones Industrial Average (DIA) fell 0.44%, and the Nasdaq Composite (QQQ) declined 0.75% in early trading.
This decline follows a challenging Thursday session where all major indexes closed lower. The S&P 500 ended Thursday at 5,949.17, down 0.6%, while the Dow Jones Industrial Average closed at 43,750.86, falling 0.5%. The tech-heavy Nasdaq Composite also saw a 0.6% decrease, closing at 19,107.65.
Fed’s Stance and Market Reaction
The market’s recent pullback can be attributed to Federal Reserve Chair Jerome Powell’s hawkish comments. Powell stated that the U.S. economy’s performance has been “remarkably good” and that there is no urgent need to lower interest rates. This stance has reduced market expectations for a rate cut, with the probability of a 25 basis point cut at the December 17-18 FOMC meeting now standing at 59%, down from 82% previously.
Economic Indicators and Their Impact
Recent economic data has shown strength in the U.S. economy, potentially supporting the Fed’s cautious approach to rate cuts:
1. Weekly initial unemployment claims fell to a 5-1/2 month low of 217,000, indicating a robust labor market.
2. October Producer Price Index (PPI) rose 2.4% year-over-year, exceeding expectations and suggesting persistent inflationary pressures.
These indicators have contributed to a rise in the 10-year Treasury note yield, which reached a 4-1/2 month high, further pressuring stocks.
Corporate News and Stock Movements
Despite the overall market decline, several companies made notable moves:
1. Applied Materials (AMAT) fell over 7% in pre-market trading after providing weak revenue guidance for the current quarter.
2. Domino’s Pizza (DPZ) surged more than 7% following Berkshire Hathaway’s announcement of a new stake in the company.
3. Walt Disney (DIS) closed up more than 6% on Thursday after reporting better-than-expected Q4 adjusted EPS and raising its fiscal 2025 EPS growth forecast.
4. Airline stocks including American Airlines (AAL), Alaska Air Group (ALK), Delta Air Lines (DAL), and United Airlines Holdings (UAL) saw gains of over 1% following positive analyst comments.
Upcoming Market Events
Investors are closely watching several upcoming events that could impact market direction:
1. October Retail Sales Report: Expected to show a 0.3% month-over-month increase, this report will provide insights into consumer spending trends.
2. Q3 Earnings Season Wrap-up: Over 85% of S&P 500 companies have reported, with 75% surpassing estimates. The average earnings growth stands at 8.4% year-over-year, exceeding pre-season forecasts.
3. Earnings Reports (11/15/2024): Companies reporting include Actinium Pharmaceuticals (ATNM), Compass Minerals International (CMP), and Spectrum Brands Holdings (SPB).
Global Market Context
The U.S. market’s performance is set against a backdrop of mixed global market sentiment. European markets opened lower on Friday, with the pan-European Stoxx 600 falling 0.8%. Asian markets showed mixed results, with Japan’s Nikkei 225 up 0.28% and China’s CSI 300 down 1.75%.
Conclusion
As the market navigates through the final weeks of 2024, investors remain cautious. The recent pullback highlights the delicate balance between economic strength and monetary policy expectations. With key economic data and the conclusion of the earnings season on the horizon, market participants will be keenly watching for signals that could shape the year-end market trajectory.
