Welcome to the Facts at Weekly Market Recap for Friday, November 8.US equities were higher this week as the S&P 500 and NASDAQ all ended the week at fresh record highs, while the Russell 2000 posted its best week since March of 2020.
All sectors were higher this week, with big tech a standout on Tesla and Nvidia's outsized gains.
Other outperformers included GSEs, banks, investment banks, credit cards, aluminum, health care distributors, auto suppliers, semis, airlines, and machinery.
Underperformers included dollar stores, China Tech, ag chemicals, toys, pharma, athletic apparel, and food and beverage.Treasuries were mostly firmer, with the curve flattening.
The policy-sensitive 2-year yield was up slightly to 4.25%, though the long end of the curve rallied. The dollar index was up 60 basis points, stronger for a sixth straight week.
Gold was down 2%, Bitcoin futures were up 10.7%, and WTI crude was up 1.3%.
The Trump election victory sparked a big rally across risk assets this week, with notable outperformance in areas like banking and credit cards, investment banks, machinery, GSEs, and crypto.Goldman Sachs also said that Trump proposed
cut in the corporate tax rate to 15% from 21% would also boost S&P 500 earnings by roughly 4%.
The removal of the election overhang was also cited as a piece of the upside narrative, while the VIX retreat and expected systematic fund buying, favorable seasonality, the end of the buyback blackout period were also part of the bullish narrative this week.
Treasury sold off sharply following the election, which was tabbed to concerns that Trump tax and budget proposals, tariff proposals, and immigration policy could all add upside inflationary risk and raise concerns around bond vigilantes, higher term premiums, and a higher R star, while the new administration's economic proposals could cause general economic overheating.
However, Treasuries ended only slightly weaker on the short end and firmer on the long end, amid thoughts that inflationary Trump policy measures might not be enacted as quickly as previously expected.
Trump economic adviser Scott Besant recently said that Trump's tariff pledges are a maximalist threat ahead of talks with trading partners and that tariffs would be layered in gradually, though trade hawk Lighthizer was asked to take position as U.S.
trade representative. The November FOMC meeting ended with a 25 basis point cut as expected to 4.75%, ending it in a unanimous decision.The policy statement was little changed.
While there was some focus on the deletion of the statement that the committee has gained confidence that inflation is moving sustainably toward the 2% target, Powell played down the changes as any sort of policy signal.
In the press conference, Powell deferred comment on potential Trump administration policies.
He also said that economic activity has been stronger than expected and the Fed will have to wait to see where the data lead ahead of the December rate decision.
Markets are now pricing a roughly 30% chance of a pause in December, unchanged from pre-rate decision but up from 17% a week ago.
Following Tuesday's election, the market is now pricing in just two 25-basis point cuts next year, down from four as recently as mid-October.
With 90% of S&P 500 companies now having reported for Q3, the blended EPS growth rate of 5.3% up around 0.2 percentage points week over week is still pacing ahead of the 4.3% expected at the end of the quarter.
Some of the key earnings themes this week included AI tailwinds, cautious non-AI semiconductor trends, mixed takeaways around travel and leisure demand.
Home Purchase Demand Uncertainty, Positive and Negative Consumer Trends, Cautious Potential Tariff Commentary, Solid Streaming Growth, and Ongoing Input Cost Headwinds.
On deck for next week, economic data, including October Core CPI on Wednesday and October Retail Sales, Friday.FedSpeak next week will include Governor Waller on Tuesday and Fed Chair Powell on Thursday.
And the Fed's latest sluice is set for release on Tuesday.That's all for the Weekly Market Recap.Thanks for listening, and please join us again Monday.
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