Market Perspective for November 19, 2023

The week before the Thanksgiving holiday offered up some encouraging news for those looking for an end to interest rate hikes. On Tuesday, CPI data was released and showed that inflation on an annual basis dropped to 3.2 percent in October from 3.7 percent in September. It also showed that inflation on a monthly basis stayed flat in October compared to September. Core inflation was up .2 percent compared to .3 percent in the previous report. Core CPI refers to the inflation rate when not accounting for volatile items such as food and energy prices.

On Wednesday, it was revealed that the Price Producers Index (PPI) figure was -.5 percent for the month of October. Core PPI was flat for the month, which was the first time that prices minus food and energy costs failed to go up since April. Core retail sales were up .1 percent compared to .8 percent in September, which is another sign of a slowdown in consumer demand that Jerome Powell believes is likely necessary to keep inflation closer to 2 percent.

Also on Wednesday, the Empire State Manufacturing Index came out, which showed an uptick in production in that sector over the past month. The final figure was 9.1, which was significantly higher than the -3.3 forecast by analysts. It was also higher than the -4.6 recorded last month.

On Thursday, unemployment claims for the week were released, and over the past seven days, there were 231,000 requests for benefits. This was an increase of about 13,000 over the previous week and was about 10,000 more than analysts expected prior to the report’s release.

Friday saw the release of building permit data in the United States, and there were 1.49 million permits issued in the previous month. This was up from 1.47 million from October’s report, and it could have a minor impact on buyers as an increase in supply helps to ease the pressure on housing prices.

The Dow 30 was up 1.99 percent this week to close at 34,974. It started the week at its lowest point of 34,236 before surging on Tuesday to 34,913. It would then spend the rest of the week in a narrow range between Tuesday’s high and Friday’s close, which was also the high of the week for this market.

The Nasdaq would finish the week up 2.79 percent to close at 14,125. As with the Dow, the Nasdaq started the week at its lowest point, made a big move on Tuesday and then spent the final three trading days in a narrow range. Specifically, the Nasdaq made a low of 13,690 on Monday and a high of 14,186 on Wednesday.

Finally, the S&P 500 would make a gain of 2.43 percent this week to finish at 4,514. Like the other two major equity markets, the S&P 500 would make a low on Monday, make a significant gain on Tuesday and then level off for the rest of the week. The weekly low was 4,398 on Monday while the weekly high was 4,515 on Wednesday.

Oil would have an up-and-down week as it was as high as $80 a barrel on Monday before plummeting to roughly $73 a barrel by Thursday. It would then rebound on Friday to finish at $76.62. However, it is still down about $18 per barrel from its high of $94 in late September.

The upcoming week will feature a condensed schedule in the United States because of the Thanksgiving holiday. Markets will largely function as normal on Monday, Tuesday and Wednesday before closing entirely on Thursday and by 1 p.m. on Friday. Unemployment claims data will be released on Wednesday instead of Thursday while FOMC meeting minutes will be released on Tuesday instead of Wednesday. The University of Michigan’s consumer sentiment and inflation expectations reports will also be released on Wednesday instead of Friday.

Friday morning also sees the release of Flash Manufacturing Services PMI and Manufacturing PMI data. Inflation, employment and other important news releases are also expected to be released in Canada, Australia and the United Kingdom throughout the week. Analysts expect these reports to show that inflation is stabilizing throughout the world, which could have an impact on the Fed’s upcoming December rate decision.

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