Market Update | November 21, 2023

I.      What Moved Markets Last Week

  • The major stock market indexes scored strong gains for a third straight week as Treasury yields continued to fall. The Dow advanced 1.9%, the S&P 500 rose 2.2%, and the Nasdaq climbed 2.4%. The longer-end 10-year Treasury yield ended the week at 4.44% and the shorter-end 2-year yield closed at 4.90%, as per Bloomberg data.
  • The dollar saw its worst week in four months amid bets the currency has already peaked, with softer-than-expected economic data reinforcing bets the Federal Reserve is done with rate hikes. Oil climbed but posted its fourth straight weekly drop on supply pressures.
  • The official meeting between Presidents Joe Biden and Xi Jinping ended with agreements to open a high-level dialogue, while Xi called on Biden to lift unilateral sanctions and provide a non-discriminatory environment for Chinese companies.
  • President Biden signed a short-term government funding bill, avoiding a federal shutdown and pushing the debate over the federal budget into next year.
  • Walmart fell the most in more than a year as the retailer struck a concerned tone on the outlook for shoppers after signs of weakness in the second half of October.
  • U.S. inflation broadly slowed in October. The so-called core consumer price index, which excludes food and energy costs, increased 0.2% from September, according to the Bureau of Labor Statistics. Economists favor the core gauge as a better indicator of underlying inflation than the overall CPI. That measure was little changed, restrained by cheaper gasoline. Government figures also reported in a separate release that the producer price index last month unexpectedly fell 0.5%, the most since April 2020, which was helped by a plunge in gasoline costs.
  • Continuing applications for unemployment benefits rose to the highest level in almost two years, underscoring the increasing challenges unemployed workers are facing in finding new jobs. Recurring jobless claims, a proxy for the number of people continuously receiving unemployment benefits, jumped to 1.87 million in the week ended November 4, according to Labor Department data. That marked an eighth straight week of increases. Initial jobless claims also rose to 231,000 in the week ending November 11, the highest since August.

 II.    Looking Ahead

  • With Moody’s lowering the outlook for the U.S. credit rating to negative last week, investors are turning their focus to fiscal sustainability as a theme that can influence global markets in the months ahead.
  • The holiday-shortened week will include a flurry of earnings reports just before Thanksgiving. The headliner will be Nvidia, which has been on an AI-fueled rally of late.
  • The economic calendar will be dominated by global flash PMIs for November, and the durable goods order report or the U.S. interest rate watchers will also have their eyes on the Federal Reserve’s release of minutes from the FOMC meeting.