Global equity markets finished higher for the week. In the U.S., the S&P 500 Index closed the week at a level of 4,559, representing an increase of 1.16%, while the Russell Midcap Index moved 1.07% last week. Meanwhile, the Russell 2000 Index, a measure of the Nation’s smallest publicly traded firms, returned 1.93% over the week. As developed international equity performance and emerging markets were higher, returning 1.06% and 0.47%, respectively. Finally, the 10-year U.S. Treasury yield moved higher, closing the week at 4.47%.
With the Thanksgiving Holiday celebrated last week, we hope our readers, clients, and friends had a truly enjoyable time with loved ones. We would also like to express our heartfelt thanks to our clients for having the confidence in us to provide financial services and advice to them.
The week of Thanksgiving is usually quite due to the shortened trading week and the lower volumes experienced across most financial markets. This year followed that trend. The two most interesting events were the release of the Federal Open Market Committee (FOMC) meeting minutes ending on November 1st and the retail sales results from “Black Friday.” It should also be noted that the U.S. stock market, as measured by the Dow Jones Industrial Average and S&P 500 index, moved higher for the fourth consecutive week. With respect to the S&P 500, the index has now posted gains for 14 of the 17 trading days in November thus far.
As has been the case throughout much of this year, investors have been hyper-focused on the Fed’s interest rate policy and its effect on the elevated level of inflation within the domestic economy.
The FOMC meeting minutes released on Tuesday revealed that Federal Reserve officials agreed that they would proceed “carefully” and only raise interest rates if progress in controlling inflation faltered. “All participants agreed that the Committee was in a position to proceed carefully,” according to the minutes, which appeared to show support for more rate hikes dissipating within the U.S. Central Bank’s Federal Open Market Committee and the baseline shifting to one in which its benchmark overnight interest rate remains steady absent a bad inflation surprise. The minutes state further that “all participants judged it appropriate to maintain” the current rate setting, a stance that will be clarified at the FOMC Decemberb12-13 meeting when policymakers issue a new set of detailed projections (“Dot Plot”) for interest rates and the economy. We continue to find it unlikely that the Fed will raise interest rates again at this meeting.
As retail sales are such an important part of the economy, we always monitor the health and mood of the “American Shopper.” While one day does not determine the status of the consumer, it is tradition to follow the activity on “Black Friday.” Mastercard SpendingPulse™, which measures in-store and online retail sales across all forms of payment, reported that retail sales on Black Friday rose 2.5% year-over-year, excluding automotive sales, not adjusted for inflation. Also, E-commerce sales on Black Friday increased by 7.5% from last year to a total of $70.9 billion globally and 9.8 billion in the U.S. – a record for the day. However, despite the strength in online sales, some analysts remain concerned with how much the consumer will ultimately spend this holiday shopping season. To this end, according to a Retail Dive article published on November 25, 2023, TD Cowen lowered its guidance for the season, now expecting holiday spend to be up 2% to 3%. Previously, the organization forecast an increase of 4% to 5%, while the National Retail Federation estimated holiday spend would be up between 3% to 4% year over year. We will continue to monitor and report on retail sales throughout the remainder of the calendar year.
Best wishes for the week ahead!
All Comments by Federal Reserve Officials are sourced from Federalreserve.gov. Retail sales information is sourced from Mastercard. Equity Market, Fixed Income returns, and rates are from Bloomberg as of 11/25/23. Economic Calendar Data from Econoday as of 11/25/23. 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.