Market Perspective for November 24, 2017

The S&P 500 Index rose 0.97 percent on the week, and the Russell 2000 Index gained 1.83 percent.

Economic data was also strong this week. Existing home sales beat expectations, following stronger-than-expected new home sales last week. Initial claims for unemployment fell to 239,000, down from 252,000 a week earlier. The University of Michigan consumer sentiment survey was the second-highest reading in the past year.

The flash November PMIs in manufacturing and services declined from October. The Eurozone flash manufacturing PMI hit its highest level since April 2011 on Thursday, and beat flat expectations. European stocks gained on Thursday while U.S. markets were closed.

Chinese equities fell 2 percent from their highs this week after China’s deleveraging efforts hit the corporate bond market. Government bond yields rose at the end of the National Congress in October, and corporate bond yields have followed.

The odds of a December hike were unchanged by the Fed meeting minutes, but the odds of a rate hike in the first half of 2018 have increased. In contrast, the currency and bond markets see only one hike in 2018. The U.S. Dollar Index tumbled to a five-week low as investors sold on the prediction.

Crude oil approached $59 a barrel this week. The Keystone pipeline remains shut after last week’s spill. Prices should stabilize when the pipeline reopens. Energy equities rebounded softly from sharp losses a week earlier.

Online retailers rallied this week as investors anticipate strong sales. Amplify Online Retail (IBUY) hit a new 52-week high. SPDR S&P Retail (XRT) traded near a 7-month high. Shares of Amazon climbed 2.58 percent on Friday, lifting online retail and the broader consumer discretionary sector.

Earnings also lifted the market this week. Deere (DE) and Medtronic (MDT) both bested expectations. Their shares rose 7.16 and 4.74 percent, respectively. Industrial and healthcare funds benefited from the moves. VanEck Agribusiness (MOO) hit a new all-time high.


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