Market Recap: Wall Street Wavers Amid Tech Selloff and Inflation Concerns
Major Indexes Performance
On Wednesday, November 27, 2024, the U.S. stock market experienced a mixed session, with major indexes showing divergent trends. The S&P 500 (^GSPC) retreated approximately 0.5% from its recent record high, while the Dow Jones Industrial Average (^DJI) showed resilience, slipping only about 0.1%. The tech-heavy Nasdaq Composite (^IXIC) bore the brunt of the selloff, declining more than 1%.
Tech Sector Leads the Decline
The day’s downturn was primarily driven by weakness in the technology sector, particularly among the so-called “Magnificent Seven” stocks. Nvidia (NVDA), a semiconductor giant, saw its shares drop 2.9%, significantly impacting the broader market due to its substantial market capitalization. Microsoft (MSFT) also contributed to the tech sector’s struggles, with its stock falling 0.7%.
PC Market Woes Affect Hardware Manufacturers
The personal computer market’s challenges were evident in the day’s trading, with major PC manufacturers facing significant pressure. HP Inc. (HPQ) plummeted 13.3% after providing a weaker-than-expected earnings forecast for the current quarter. Similarly, Dell Technologies (DELL) experienced a sharp 13.1% decline following disappointing quarterly revenue figures that fell short of Wall Street’s expectations.
Economic Data and Inflation Concerns
Investors closely analyzed the latest economic data, particularly focusing on inflation metrics. The Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, showed signs of persistent inflationary pressures. The core PCE index, which excludes volatile food and energy prices, rose 0.3% month-over-month in October, aligning with expectations. However, the year-over-year increase of 2.8% surpassed September’s 2.7% reading, raising concerns about the Fed’s progress in achieving its 2% inflation target.
GDP and Labor Market Update
The second estimate of third-quarter GDP remained unchanged at an annualized growth rate of 2.8%, indicating steady economic expansion. The labor market continued to show strength, with weekly jobless claims decreasing to 213,000 for the week ending November 23, down from 215,000 the previous week.
Market Sentiment and Federal Reserve Outlook
The latest economic data has influenced market expectations regarding the Federal Reserve’s monetary policy. Traders now see a roughly 34% probability that the Fed will maintain current interest rates at its upcoming meeting, up from about 24% a month ago, according to the CME FedWatch Tool.
Corporate News and Trade Policy
In a significant development for international trade, President-elect Donald Trump appointed Jamieson Greer as the U.S. Trade Representative. Greer’s involvement in Trump’s previous China tariffs has Wall Street analysts speculating about potential new tariffs on major U.S. trading partners.
Looking Ahead: Key Events and Market Drivers
As we approach the Thanksgiving holiday, market participants are keeping a close eye on several factors that could influence trading in the coming days:
1. Inflation data: Further analysis of the PCE index and its implications for Fed policy.
2. Holiday shopping season: Early indicators of consumer spending trends during Black Friday and Cyber Monday.
3. Trade policy developments: Potential announcements regarding new tariffs or trade negotiations.
4. Tech sector performance: Continued monitoring of the “Magnificent Seven” stocks and their impact on broader market indices.
5. Economic indicators: Upcoming reports on consumer confidence, housing market data, and manufacturing activity.
Conclusion
As the market navigates through mixed signals from economic data and corporate earnings, investors remain cautious. The tension between robust economic growth and persistent inflationary pressures continues to shape market dynamics. With the holiday-shortened trading week ahead, market participants will be closely watching for any developments that could set the tone for the final month of 2024.
