Market Commentaries

  • Last Week’s Markets in Review: Markets Give Thanks to the Fed…for Now


    Global equity markets finished higher for the week. In the U.S., the S&P 500 Index closed the week at a level of 4,514, representing an increase of 2.31%, while the Russell Midcap Index moved 3.93% last week. Meanwhile, the Russell 2000 Index, a measure of the Nation’s smallest publicly traded firms, returned 5.48% over the week. As developed international equity performance and emerging markets were also higher, returning 4.51% and 2.99%, respectively. Finally, the 10-year U.S. Treasury yield moved lower, closing the week at 4.44%.

    Inflation, as measured by the Consumer Price Index (CPI), was flat in October from its previous reading, giving fresh hope to the market that monetary policies have been effective in helping drive down inflated prices – though there is still more work to be done. The fresh reading from the U.S. Bureau of Labor Statistics (BLS) was the lowest reading for the index in two years and just a 3.2% year-over-year increase. On a monthly and yearly basis, the index was lower than the forecasted figures by Dow Jones of 0.1% and 3.3%, respectively. The reaction from equity markets following this release was positive, to say the least, with the S&P 500 index posting a 1.91% single-day return, as many market strategists now believe, as we have been suggesting, that the Federal Reserve has reached the end of this interest rate hiking cycle.

    While the CPI reports are lagging in the sense that consumers would have already recognized the reduction in goods prices before the data is released, consumers may witness some leading prices this week. According to the American Farm Bureau Federation (AFBF), the average cost of a Thanksgiving dinner is projected to be lower than last year! In the October CPI, food prices jumped by 2.1%. However, due to a significant cost reduction of 5.6% in the prices of turkeys compared to 2022, deflation, rather than inflation, will be exhibited in this year’s Thanksgiving dinner costs. In fact, the AFBF projects that the average cost of a Thanksgiving dinner for ten people this year will be $61.17 compared to $64.05 in 2022. In a time when consumers are beginning to feel the pinch of the Fed’s policies, the holiday cost reduction comes as a welcome sign.

    Happy Thanksgiving to all, and best wishes for the week ahead!

    Equity Market, Fixed Income returns, and rates are from Bloomberg as of 11/17/23. Economic Calendar Data from Econoday as of 11/17/23. International developed markets are measured by the MSCI EAFE Index, emerging markets are measured by the MSCI EM Index, and U.S. Large Caps are defined by the S&P 500 Index. Sector performance is measured using the GICS methodology.

    Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion and Walsh cannot guarantee the accuracy of said information and cannot be held liable. You cannot invest directly in an index. Diversification can help mitigate the risk and volatility in your portfolio but does not ensure a profit or guarantee against a loss.

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