November 15th, 2024
Today, U.S. stocks finished lower for the third week out of four, marking a significant pullback from the post-election euphoria that had recently propelled markets to record highs. The retreat was driven by a combination of robust economic data and cautionary signals from the Federal Reserve, leading investors to reassess their expectations for interest rate cuts in the near future.
Market Performance
- S&P 500: Fell 1.32% to 5,870.62, down 2.08% for the week
- Dow Jones Industrial Average: Lost 0.70% to 43,444.99, down 1.24% for the week
- Nasdaq Composite: Decreased 2.24% to 18,680.12, down 3.15% for the week
Key Factors Driving the Market
1. Strong Economic Data: October retail sales rose 0.4%, surpassing expectations and indicating continued consumer strength. This, coupled with upward revisions to September's figures, painted a picture of a resilient economy.
2. Fed Comments: Federal Reserve Chairman Jerome Powell's remarks that the central bank is in "no hurry" to cut rates dampened market enthusiasm. The probability of a December rate cut fell below 60% in futures trading, down from recent peaks near 80%.
3. Sector Performance: Defensive sectors like utilities and real estate managed gains, while information technology and biotech stocks faced significant pressure.
4. Political Concerns: Growing worries about the incoming Trump administration's policies, including potential tax cuts, tariffs, and immigration reform, contributed to market unease.
Notable Stock Movements
- Applied Materials (AMAT): Fell over 9% despite beating earnings expectations, due to a weak outlook
- Alibaba (BABA): Dropped 2.20% after missing revenue expectations
- Palantir (PLTR): Surged more than 11% on news of its move to the Nasdaq
- Healthcare stocks: Particularly vaccine and weight-loss drug makers, declined on concerns about potential policy changes
The Look Ahead
Investors are bracing for a busy week of retail earnings reports and Nvidia's highly anticipated results. The housing market will also be in focus with October housing starts, building permits, and existing home sales data on deck.
The market's reaction to recent economic strength suggests a return to the "good news is bad news" paradigm, where strong economic data raises concerns about delayed monetary easing. As the year-end approaches, investors will be closely watching for signs of economic moderation that could support the case for rate cuts in 2024.
While the market has pulled back from recent highs, it remains in positive territory for the month. The coming weeks will be crucial in determining whether this is just a temporary pause in the rally or the beginning of a more significant correction.
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