Market Commentary

For the week ending 12/6/2024

 

Major stock indexes ended mixed in a week that saw the S&P 500 and NASDAQ hit record highs, while the small-cap Russell 2000 Index declined after back-to-back weeks of outperformance versus its large-cap peers. Sector performance was also widely dispersed as consumer discretionary and information technology shares all gained over 3% for the week, while energy, utilities, and materials stocks—typically more value-oriented segments of the market—all fell over 3%.

The week brought several closely watched economic reports, particularly related to labor market data, with much of the focus on Friday’s nonfarm payroll report. The Labor Department reported that the U.S. added 227,000 jobs in November, slightly higher than consensus estimates.  Earlier in the week, the Labor Department also reported that the number of job openings in October increased to 7.74 million and that the number of Americans quitting jobs voluntarily, seen by some as a better measure of labor market conditions, increased to 3.3 million.

Other headlines during the week centered around comments from Federal Reserve officials as investors continued to look for clues regarding the pace of interest rate cuts. Speaking Monday, Federal Reserve Governor Christopher Waller noted that despite some recent data indicating that progress on inflation may be stalling, he is leaning toward supporting a cut to the Fed Funds Rate absent any surprising incoming economic data.  The week’s positive economic data, along with Governor Waller’s comments, helped boost expectations for a 0.25% rate cut when the Fed meets later this month.

Geopolitical headlines through the first half of the week were largely dominated by French and South Korean politics.  Over the weekend, rebels in Syria took over the country and forced Bashir al Assad to flee to Russia, where he was given asylum.  Germany’s government is in crisis as well and will likely be forced into new elections as it struggles with a slumping economy and mounting debt.  Though these events had a limited impact on U.S. markets initially, they highlight the potential challenges that will confront the incoming Trump administration.  President-elect Trump has signaled that he wants to make wholesale changes to the structure of the U.S. federal government.  Even allowing that reform may be necessary and, done properly, will be an improvement in the long run – in the short run, what is being proposed is highly disruptive and will diminish our capacity to respond to and shape events to our advantage.  Chaos benefits no one, least of all Wall Street, which depends on order and predictability to make efficient and productive use of our financial resources.  Wall Street has proven over the decades that it can “climb a wall of worry” and stay invested during turbulent times.  We remain optimistic that these challenges can be met, but we are not insensitive to the scope of the challenges before us and the rising crest of instability in the global economy.

For the week, the Dow Jones fell 268 points to 44,643 (-0.6%), the NASDAQ rose 642 points to 19,860 (3.3%), and the S&P 500 gained 58 points to 6,090 (1.0%)

Oil fell $1.00 to $67.00/bbl.       Gold was down $7 to $2,660/oz.

And the yield on the 10 yr. Treasury was unchanged at 4.2%.

 

The opinions in this commentary are the writer’s and may occasionally vary somewhat from the opinions of the Winch Financial investment team as a whole. Client recognizes that any opinions or analysis described in this commentary involve the Advisor’s judgment and good faith and do not constitute investment advice. All recommendations or observations are subject to various market, currency, economic, political and business risks. Client recognizes that no party to this alert has made any guarantee, either oral or written, that Client’s investment objectives will be achieved. Advisor shall not be liable for any action performed or omitted to be performed or for any errors of judgment or mistake, except in the case of Advisor’s gross negligence, willful misconduct, or violation of applicable law. Advisor shall not be responsible for any loss incurred by reason of any act or omission of Client, custodians, broker-dealers, or any other third party. Nothing in this commentary shall constitute a waiver or limitation of any rights that Client may have under applicable state or federal law, including without limitation the state and federal securities laws.