Stock Market Recap: Wall Street Wavers as Fed Signals Caution on Rate Cuts
Major Indexes Retreat Amid Fed’s Hawkish Stance
On Friday, November 15, 2024, the U.S. stock market closed lower, marking a pause in the post-election rally as investors digested hawkish comments from Federal Reserve Chairman Jerome Powell. The day’s trading session highlighted the delicate balance between economic optimism and monetary policy expectations.
The Dow Jones Industrial Average (DJI) fell 0.5% or 207.33 points, closing at 43,750.86. Similarly, the S&P 500 dropped 0.6% to finish at 5,949.17, while the tech-heavy Nasdaq Composite slid 0.6% to 19,107.65. This downturn came after the Dow had reached a historic milestone earlier in the week, closing above 44,000 for the first time .
Fed’s Powell Dampens Rate Cut Expectations
The market’s retreat was largely attributed to comments made by Fed Chair Jerome Powell during an event in Dallas. Powell stated that the central bank was “not in a hurry” to cut interest rates, emphasizing that the current economic strength allows for a careful approach to monetary policy decisions .
This stance led to a significant shift in market expectations. The CME FedWatch tool showed that the probability of a 25 basis point rate cut in December dropped from 82.5% to 62.6% following Powell’s remarks . Investors are now recalibrating their expectations, with current projections suggesting a full 1% rate cut over the course of 2024 .
Sector Performance and Notable Stock Movements
The day’s trading saw varied performance across sectors:
1. Consumer Discretionary (XLY), Health Care (XLV), and Industrials (XLI) were among the hardest hit, with declines of 1.4%, 1.6%, and 1.7% respectively .
2. Applied Materials (AMAT) shares fell more than 5% in after-hours trading due to a weaker-than-anticipated revenue outlook .
3. Domino’s Pizza (DPZ) surged over 7% following Berkshire Hathaway’s announcement of a new stake in the company .
4. Palantir Technologies (PLTR) added nearly 4% after announcing its transfer from the NYSE to Nasdaq .
Global Market Context and Economic Indicators
The U.S. market’s performance echoed global trends, with European markets also opening lower on Friday. The pan-European Stoxx 600 fell 0.8% in early deals, reflecting investor caution across major economies .
Economic data released during the week was largely in line with expectations, providing a mixed backdrop for market sentiment. The relatively stable economic indicators, combined with Powell’s comments, have led investors to reassess the timeline for potential interest rate cuts.
Looking Ahead: Market Events and Potential Catalysts
As we move forward, market participants will be closely watching several key factors:
1. Upcoming economic data releases, which could influence the Fed’s decision-making process.
2. Corporate earnings reports, particularly from tech giants and other market-moving companies.
3. Geopolitical developments, including any shifts in trade policies or international relations under the new administration.
4. Further commentary from Fed officials that might provide additional insights into the central bank’s thinking on interest rates.
Why Was the Market Down Today?
The primary reason for today’s market decline was the recalibration of interest rate expectations following Powell’s comments. Investors had previously priced in more aggressive rate cuts, and the Fed’s cautious stance led to a reassessment of market positions.
Additionally, the market’s reaction reflects a broader trend of consolidation after the recent post-election rally. As Sam Stovall, chief investment strategist at CFRA Research, noted, “Investors are catching their breath and evaluating whether the advance has merit” .
In conclusion, while the stock market faced headwinds on November 15, 2024, the underlying economic fundamentals remain strong. As investors navigate the evolving monetary policy landscape, market volatility may persist in the short term. However, the focus on corporate performance, economic indicators, and policy decisions will continue to shape market direction in the coming weeks and months.
