Weekly Capital Markets Update

Global equity markets finished higher for the week. In the U.S., the S&P 500 Index closed the week at a level of 5969, representing an increase of 1.72%, while the Russell Midcap Index moved 3.72% last week. Meanwhile, the Russell 2000 Index, a measure of the Nation’s smallest publicly traded firms, returned 4.49% over the week. As developed international equity performance and emerging markets were higher, returning 0.01% and 0.22%, respectively. Finally, the 10-year U.S. Treasury yield moved lower, closing the week at 4.40%.

Last week offered a much-needed break from a period of information overload centered around the Presidential election results and the Fed’s most recent rate cut. Only weekly jobless claims and existing home sales for October were notable on the economic data front. This break in economic data allows us to focus on a successful third-quarter corporate earnings season, highlighted once again by Nvidia (Ticker: NVDA), which provided another stellar earnings report after the market closed last Wednesday. Technology powerhouse Nvidia exceeded analyst expectations for earnings and revenues and provided a better-than-expected forecast for the 4th quarter.

However, earnings growth for the 3rd quarter was not limited to Nvidia. According to FactSet, companies within the S&P 500 Index have a blended (year-over-year) earnings growth rate of 5.8%, and the estimated earnings growth rate for the fourth quarter is expected to double to 12.0%. A sector analysis of this expected improvement in earnings growth will be insightful. Eight of the eleven sectors are predicted to report year-over-year earnings growth in Q4 2024. Six of these eight sectors are expected to report double-digit earnings growth for the quarter: Financials (38.9%), Communication Services (20.7%), Information Technology (13.9%), Utilities (12.9%), Health Care (12.6%), and Consumer Discretionary (12.5%). “It is interesting to note that analysts believe double-digit earnings growth will continue for the S&P 500 through all four quarters of 2025. The estimated earnings growth rates for Q1 2025 through Q4 2025 are 12.7%, 12.1%, 15.3%, and 17.0%,” said John Butters of FactSet. This expansion of earnings growth is critical to the expansion and sustainability of the current bull market rally, which is now over 2 years old.

As it relates to economic data, the number of Americans filing new applications for unemployment benefits fell to a seven-month low last week, suggesting that job growth likely rebounded in November after abruptly slowing last month amid hurricanes and labor strikes. Unemployment benefits dropped 6,000 to a seasonally adjusted 213,000 for the week ended Nov. 16, the lowest reading since April. The estimated forecast was 220,000 claims for the latest week.

In addition, home sales jumped 3.4% in October to a seasonally adjusted annual rate of 3.96 million units after slumping to a 14-year low in September. Economists had forecast home resales rebounding to a rate of 3.93 million units.

Best wishes for a wonderful Thanksgiving holiday this week enjoyed with family and friends!

Equity and Fixed Income Index returns sourced from Bloomberg on 11/22/24. Jobless Claims data is sourced from The Labor Department. Existing Home Sales data is sourced from the National association of Realtors. Corporate Earnings data is sourced from FactSet. Economic Calendar Data from Econoday as of 11/22/24. 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.