DFG Navigator Archives | December 2024

Your Capital Markets Snapshot: A Mixed Week for Equity Markets

It was a mixed week for equity markets as the S&P snapped a three-week streak of gains and the Nasdaq posted a new all time high supported by asset flows into many of the mega-cap tech names. As the end of the year draws near, US equities are on pace for back- to-back years of over 20% gains for the first time since 1999. Tailwinds for this year’s performance include solid economic growth, falling inflation, and the start of easing monetary policies by the Federal Reserve. However, last week’s inflation release marked the second month in a row the CPI came in above the previous month’s reading. While the last week’s reading was in line with expectations, it may be a sign inflation reduction is stalling, which could increase uncertainty regarding future central bank actions. With the Federal Reserve meeting this week, expectations remain high for another 25-basis points rate cut, but expectations for rate cuts by the end of 2025 are moderating, current expectations suggest a total of 75 bps down from 175 bps expected in late September.

Your Capital Markets Snapshot: U.S. Equities Continued their Recent Bullish Momentum

Last week, U.S. equities continued their recent bullish momentum, with the S&P 500 and Nasdaq both reaching new all-time highs. Economic data supported this positive trend, with the U.S. labor market showing resilience as nonfarm payrolls exceeded expectations, adding 227,000 jobs. The unemployment rate ticked up slightly to 4.2% but remains below long-term averages. Additionally, the ISM manufacturing and services PMI indicated expansion, suggesting ongoing economic growth. The Atlanta Fed's GDPNow model was revised higher to 3.3%, reflecting strong economic data. Despite potential for policy uncertainties from the next regime and market volatility, the overall economic backdrop remains strong, providing opportunities for investors.

Your Capital Markets Snapshot: U.S. Stock Indexes Continued their Positive Momentum

Last week, U.S. stock indexes continued their positive momentum. The S&P 500 and Dow both hit new record levels, while the NASDAQ remained slightly below its recent high. Additionally, U.S. stock indexes saw significant gains in November, marking the sixth positive month out of the past seven. U.S. government bond yields fell sharply following the announcement of Scott Bessent as the next Treasury secretary. While inflation progress appears to have stalled, with the Personal Consumption Expenditures Index rising slightly in October, the Federal Reserve expressed confidence in easing price pressures and a strong labor market. Looking ahead, analysts expect robust fourth-quarter earnings growth for S&P 500 companies.

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