“When you invest, you are buying a day that you don’t have to work.”
-Aya Laraya
Here’s what you need to know this week:
- November closes as the strongest month of the year for markets
- Investors parse a flurry of economic reports for clues to the Federal Reserve’s next move
Winning Streak Continues
Stocks closed the month of November firmly in the green and marked the best month of gains for 2024[1].The S&P 500, NASDAQ, Dow Jones and Russell 2000 all reached all-time highs on the heels of the US election. These gains can likely be attributed to eliminating the uncertainty of the election as well as optimism that a second Trump administration will be friendly to markets. Corporate earnings have also held up well, and many analysts are predicting that this rally will continue through December and into 2025.
Fed Uncertainty
The Federal Open Market Committee (FOMC) meets in two weeks to determine interest rate policy and there is still uncertainty as to their next move. As of writing, the bond market is assigning a 68.6% chance of a 25 basis point (0.25%) cut and a 31.4% chance of no rate cut[2]. There have been a few important economic reports over the past week with more on the horizon that may impact the Fed’s decision.
The first was the Personal Consumption Expenditures (PCE) report last Wednesday. As you may remember, the PCE report is the Federal Reserve’s preferred measure of inflation; this report showed monthly inflation rising at 0.2% and annualized inflation at 2.3%, both in line with economists’ expectations[3]. This is close to the Fed’s target of 2% inflation and didn’t largely impact the odds of a rate cut.
The 3rd Quarter US GDP report, which measures total productivity of the US economy, was also released on Wednesday and showed the US economy growing at an annualized rate of 2.8% which is well above its 2% average:
Strong GDP growth is always a good sign, but it may discourage the Fed from lowering rates further.
Yesterday we received the Job Opening and Labor Turnover Survey (JOLTS) which measures the state of employment in the US. This month’s report showed a slight increase in job openings along with a slight decrease in layoffs, which analysts took as a sign that the job market is slightly slowing but in an orderly fashion[4]. This report likely increases the odds of a rate cut.
We also have the November payrolls report coming this Friday which will provide additional insight into the labor market and then the Consumer Price Index (CPI) report next Wednesday, which will give us one final look at inflation before the FOMC meets. The FOMC has been characteristically tight-lipped about their decision, although Fed Governor Christopher Waller, a voting member of the committee, said at a conference in Washington that he is leaning towards another rate cut in December[5]. However, he also said that the data in these upcoming economic reports may sway his and the committee’s thought process. For now, the odds of a rate cut look good but are far from a foregone conclusion.
What Else
- Dozens of US citizens across 19 states have fallen ill due to a salmonella outbreak believed to be linked to cucumbers
- The US placed new sanctions on Russian banks in the latest attempt to curb Russian aggression in Ukraine
- Israel and Lebanon have both accused each other of violating a ceasefire agreement
- The NCAA football conference championships take place this weekend
- The NBA in-season tournament starts next Tuesday, December 10th
What We’re Reading
The Notre Dame cathedral is set to reopen five years after a catastrophic fire nearly destroyed the centuries-old monument. Many heads of state including President-elect Trump are expected to be in attendance for the reopening ceremony. Click below to read a deep dive on the restoration efforts as well as photos of both the damage and the restored cathedral:
What’s Happening Downtown
Lights on Broadway has returned to Automobile Alley and takes place every Saturday from 4:00 PM to 7:00 PM until Christmas. This event features specials and deals from local businesses, as well as live music, photos with Santa Claus, and of course Automobile Alley’s signature Christmas light display. Click below to learn more:
Written by: Kane Ogle, CFP®
Steve Beck, Amber Eduvigen, CFP®, Kane Ogle, CFP®, Cale Olbert, CFP®, Brett Valentine, Brandon Ingerson, Jenni Hess, Anne Boone
Sources: [1] Yahoo! Finance [2] CME Group [3] CNBC [4] Reuters [5] Bloomberg