The global markets have been wild the last week with bullish divergences in the US stock market while geo-political tensions have sent oil and emerging markets lower. Retail stocks were the big winners after strong earnings from Gap and Ross Stores. Gap is now looking bullish while Ross failed at key resistance. Nvidia, a former giant among stocks, is looking very weak and may be heading lower. On the home front, consumer confidence in the US and UK was surprisingly strong and is a bright spot in the markets. The economy is a complicated web and consumers are trying to be optimistic while being cautious at the same time. Overall, the market sentiment has been mixed, with some sectors showing strength while others remain under pressure due to ongoing geopolitical tensions.
That being said, the wars in Ukraine and Middle East are creating enough havoc to keep us on our toes and concerned about the impact on energy. The eurozone is a mess and Bitcoin is a concern with its rapid rise. In addition, the yield curve is still a problem and a sign of a larger issue with our economy. In this article, we will review the main market stories from the past week and set up the most important trading ranges to focus on for the week ahead.
The S&P 500 is looking strong, and analysts are feeling good about the possibility of a big year in 2024. In fact, some are predicting the bull-market cycle for U.S. stocks could speed up in 2025, leading to gains of over 20% for the second year in a row. The Dow Jones Industrial Average ($DJI) has been a benchmark for the US equity markets, and its recent performance has been closely watched by investors, reflecting broader market trends. MarketWatch
The Dow Jones Industrial Average ($DJI) has been a benchmark for the US stock market, and its recent performance has been closely watched by investors. As of November 22, 2024, the Dow Jones Industrial Average posted a record close, outpacing the broader market and tech. This surge can be attributed to the strong labor market and home sales reports, which have boosted investor confidence. The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue-chip US common stocks, making it a reliable indicator of the overall market trend.
Retailers have been a big part of the market's rally, with Gap jumping 12.8% and Ross Stores up 2.2% after they reported encouraging earnings. Gap's stock is up 24.3% in November, its best month since March. Ross Stores has surged 17.1% this month. ... Stocks of Nvidia and Intuit fell after the companies reported earnings. AP News
The University of Michigan's consumer sentiment index came in at 71.8 in November, up from 70.5 in October. The increase was largely driven by a big boost in confidence among Republican households in the wake of the midterm elections. Wall Street Journal
The S&P Global flash U.S. Composite PMI Output Index, which measures manufacturing and services, rose to 55.3 in November, the highest since April 2022. Additionally, the headline consumer price index, one of the key economic indicators, has shown fluctuations due to external factors, impacting inflation rates and economic forecasts. The reading suggests economic growth is likely to accelerate in the fourth quarter. Reuters
The labor market has been a bright spot in the US economy, with the Department of Labor reporting an unexpected drop in initial jobless claims for the week ended November 16, 2024. Applications for unemployment benefits fell to 213,000, a decline of 6,000 from the prior week and the lowest number since April 2024. This decline in unemployment claims suggests a strong labor market, which is likely to support economic growth. Additionally, the National Association of Realtors’ report of existing home sales in October rose year over year for the first time since July 2021, indicating a rebound in the housing market. These positive reports have contributed to the recent rally in the stock market.
The PCE (Personal Consumption Expenditures) inflation report is a crucial indicator of inflation in the US economy, especially during the holiday season. Released by the Bureau of Economic Analysis (BEA), this report sheds light on consumer spending habits and the overall inflationary pressures in the economy. For retailers and businesses, the holiday season is a critical period, and the PCE inflation report provides a snapshot of consumer spending and inflation trends during this time.
The latest PCE inflation report revealed a moderate increase in inflation, with the core PCE price index rising 0.2% month-over-month and 2.1% year-over-year. Additionally, personal consumption expenditures increased by 0.4% month-over-month, indicating strong consumer spending. This data suggests that the US economy is experiencing moderate economic growth, with inflation remaining under control.
The Federal Reserve closely monitors the PCE inflation report as it provides valuable insights into the overall inflationary pressures in the economy. The findings from this report can influence the Fed’s decisions on interest rates and other policy tools. As the holiday season progresses, the PCE inflation report will continue to be a key indicator of economic health and consumer behavior.
On November 18, Spirit Airlines entered Chapter 11 bankruptcy protection. The budget carrier blamed years of losses, debt and rising costs, intense competition, and failed merger attempts for its financial plight. Wikipedia
MicroStrategy’s stock has exhibited significant market volatility, drawing comparisons to the dot-com bubble era. This volatility is largely attributed to the company’s substantial investments in Bitcoin, which have made its stock performance closely tied to the cryptocurrency’s price fluctuations. Analysts express concern that such behavior may indicate broader market instability.
The HCOB flash eurozone composite PMI tumbled to a 10-month low of 48.1 in November, highlighting the economic challenges faced by the region. Both manufacturing and services are contracting in the eurozone, and Germany and France are being hit hardest. The Times
UK consumer confidence rebounded in November, after falling in October as budget worries spooked consumers. The GfK index rose three points to -18, suggesting consumers are cautiously optimistic. MarketWatch
European markets experienced a mixed week, with the pan-European STOXX Europe 600 Index ending 1.06% higher on hopes that the European Central Bank (ECB) could lower borrowing costs in December. However, major stock indexes in Italy and France fell, while Germany’s DAX tacked on 0.58%. The UK’s FTSE 100 Index advanced 2.46%, reflecting a positive sentiment among investors.
In Japan, the Nikkei 225 Index fell 0.93%, and the broader TOPIX Index was down 0.56%. Heightened geopolitical tensions dented risk appetite, prompting demand for assets perceived as safer, including the Japanese yen. The yield on the 10-year Japanese government bond (JGB) approached 1.1%, nearing a 13-year high, indicating investor caution in the face of global uncertainties.
Chinese equities declined as a light economic calendar and concerns about the incoming Trump administration curbed risk appetites. The Shanghai Composite Index fell 1.91%, while the blue-chip CSI 300 gave up 2.6%. In Hong Kong, the benchmark Hang Seng Index lost 1.01%, reflecting investor concerns about regional stability and economic policies.
In other emerging markets, the National Bank of Hungary (NBH) held its regularly scheduled meeting and kept its main policy rate, the base rate, at 6.50%. The NBH also held the overnight collateralized lending rate—the upper limit of an interest rate “corridor” for the base rate—at 7.50%. The central bank left the overnight deposit rate, which is the lower limit of that corridor, unchanged at 5.50%. These decisions reflect the central bank’s cautious approach amid global economic uncertainties.
Nvidia’s stock rose just 0.5% after the company’s earnings report, and other big tech stocks are drifting lower. Meanwhile, the utilities sector outperformed other sectors, driven by optimism from increasing demand for clean energy. That lack of momentum is raising questions about Nvidia’s valuation and the market’s ability to move higher. Barron’s
Oil prices are volatile, largely driven by supply jitters related to the Russia-Ukraine conflict, reflecting the complex market dynamics at play. U.S. oil prices jumped over 6% this week on supply disruption fears, but disappointing eurozone business activity data pushed prices lower. Reuters
Note: The above is a summary of global market activity. For more information, please review the related links.
The escalating Ukraine missile war is raising market fears of crude supply disruptions if the conflict spreads. Market expectations regarding potential rate changes are influenced by these geopolitical developments, impacting investor sentiment. That’s helped lift oil prices nearly 2% on Thursday. MarketWatch
Tensions in the Middle East, specifically the Israel-Hezbollah conflict, are adding to market jitters. Despite higher oil prices, stock markets in the United Arab Emirates are weakening. Dubai's stock market snapped a six-week rally, and Abu Dhabi's market extended its losses. Investor worries about regional stability and economic fallout are key to the declines. Reuters
Global markets are on high alert, responding to escalating conflicts in Ukraine and the Middle East, which are significantly impacting investor sentiment. The dollar and cryptocurrency markets are holding up, while clean energy investments are weakening. Investors are cautious and watching geopolitical developments carefully. Reuters
Rising geopolitical tensions are sparking worries about supply chain issues and disruptions to global energy supply chains. Companies with larger market capitalization are better positioned to withstand supply chain disruptions. While tensions are bullish for oil in the short term, analysts say the market’s momentum could fade if the economy weakens further and supply remains robust. MarketWatch
Some analysts see strategic reserves and additional production as the only solutions to mitigate the impact of $100+ per barrel oil. The Singapore Globe and Mail
Market risk is an inherent part of investing, and it’s essential to understand and manage it to achieve long-term financial goals. Market risk refers to the potential loss of value in investments due to market fluctuations. To manage market risk, investors can diversify their portfolios by investing in a mix of asset classes, such as stocks, bonds, and commodities. This can help reduce the impact of market volatility on their investments. Additionally, investors can consider hedging strategies, such as options or futures contracts, to mitigate potential losses. It’s also crucial to stay informed about market trends and adjust investment strategies accordingly.
Market volatility is a measure of the fluctuations in the value of investments over time. It’s essential to understand that past performance is not a guarantee of future results, and market volatility can be unpredictable. The VIX index, also known as the fear index, measures the market’s expectation of 30-day volatility and can be used as a gauge of market risk. Investors should be aware that market risk and volatility can be influenced by various factors, including economic growth, interest rates, and geopolitical events. By understanding these factors and managing market risk, investors can make informed investment decisions and achieve their long-term financial goals.
It’s essential to remember that past performance is not a guarantee of future results. While historical data can provide valuable insights into market trends and patterns, it’s crucial to consider the current market environment and potential risks when making investment decisions.
Investors should be aware of the risks associated with investing in the stock market, including market risk, which is the risk that the value of an investment may fluctuate due to changes in market conditions. Additionally, investors should consider the potential for declining markets, which can result in losses.
The Dow Jones Industrial Average, a widely followed stock market index, is not a guarantee of future results. While the index has historically provided strong returns over the long term, it’s essential to consider the current market environment and potential risks when making investment decisions.
Investors should also be aware of the potential risks associated with investing in specific sectors or industries, such as the utilities sector, which has outperformed in recent weeks. While the sector may have shown strong performance in the past, it’s essential to consider the current market environment and potential risks when making investment decisions.
Ultimately, investors should consult with a financial advisor or conduct their own research before making investment decisions. It’s essential to consider the current market environment, potential risks, and individual financial goals when making investment decisions.
As we look to the week of November 25–29, 2024, several key events and economic data will influence the financial markets:
The Conference Board is scheduled to report its November Consumer Confidence Index on Tuesday. The consensus forecast estimates a jump to 112.9 from October's 108.7. This would mark the second consecutive month of improvement. A more confident consumer is positive for retail sales heading into the holiday season. [AP News]
The Federal Reserve will release minutes from its latest Federal Open Market Committee (FOMC) policy meeting on Wednesday. Investors will be looking for clues about the Fed’s economic outlook and any decisions on future interest rate hikes in the minutes from the Fed’s last meeting. The central bank cut its benchmark interest rate by a quarter point last week to help support the job market as inflation continues to decline. AP News
Several big retailers will report earnings, providing guidance on consumer spending habits heading into the holiday sales season. However, it is important to note that past performance does not guarantee future results, and investors should conduct thorough research.
Bath & Body Works is expected to announce third-quarter earnings of 47 cents per share on $1.58 billion in revenue on Monday. The company's stock has dropped about 30% this year, making this earnings report critical.
Other retailers, including Abercrombie & Fitch, Dick's Sporting Goods, and Home Depot, are expected to report earnings next week.
The week ends with Black Friday on November 29, which traditionally kicks off the U.S. holiday shopping season. The weekly market recap shows a positive trend in retail sales, driven by strong holiday shopping and robust consumer spending. Investor sentiment is tied to the economy, so strong holiday sales could help reinforce a positive outlook. Reuters
The Middle East and Ukraine conflicts remain major threats to global markets. Investors should be cautious, as escalating tensions could impact energy prices and market stability. [Reuters]
In summary, the week ahead features a range of economic data, corporate earnings, and geopolitical news that is likely to influence the markets. Investors are advised to stay informed and consider these developments carefully before making investment decisions.
