MARKET UPDATE—WEEK OF NOVEMBER 27, 2023

Image of bull and bear representing the stock market
 

 

 

 

 

 

 

 

 

 

 

Quick Hits

1. Report releases: Existing home sales fell to their lowest level since 2010.
2. Financial market data: Nvidia stock fell despite strong earnings as China restrictions
remained in focus.
3. Looking ahead: This week, we expect data on new home sales, consumer confidence,
and personal spending.
 

Report Releases—November 20–24, 2023

Existing Home Sales: October (Tuesday)

Existing home sales fell more than expected in October, bringing the annualized rate of sales to its lowest level since 2010. High prices, limited supply, and high mortgage rates were headwinds for
prospective homebuyers.

  • Expected/prior month existing home sales monthly change: –1.5%/–2.2%
  • Actual existing home sales monthly change: –4.1%

Federal Open Market Committee (FOMC) Meeting Minutes: November (Tuesday)

The minutes from the Federal Reserve’s (Fed’s) November meeting showed that central bankers remain committed to combating inflation through a higher-for-longer interest rate environment. The release of the minutes did not meaningfully change market expectations for the path of monetary policy, with futures markets pricing in three rate cuts by the end of 2024.

Preliminary Durable Goods Orders: October (Wednesday)

Headline durable goods orders fell more than expected in October, due in large part to a drop in volatile, non-defense aircraft orders. Core orders, which strip out the impact of transportation orders, were flat.

  • Expected/prior durable goods orders monthly change: –3.2%/+4%
  • Actual durable goods orders change: –5.4%
  • Expected/prior core durable goods orders monthly change: +0.1%/+0.2%
  • Actual core durable goods orders change: +0%

University of Michigan Consumer Sentiment Survey: November (Wednesday)

Consumer sentiment increased modestly in November.

  • Expected/prior month consumer sentiment survey: 61/60.4
  • Actual consumer sentiment survey: 61.3

The Takeaway

  • Durable goods were lower than expected as a drop in aircraft orders led to underlying volatility.
  • Existing home sales remained weak; homeowners who locked in rates below current rate levels have little incentive to sell.
     

Financial Market Data

Equity

Index

Week-to-Date

Month-to-Date

Year-to-Date

12-Month

S&P 500

1.02%

8.88%

20.52%

15.14%

Nasdaq Composite

0.90%

11.00%

37.20%

28.03%

DJIA

1.29%

7.30%

8.84%

5.27%

MSCI EAFE

1.06%

9.13%

12.12%

11.13%

MSCI Emerging Markets

0.47%

7.25%

4.96%

6.93%

Russell 2000

0.56%

8.89%

4.05%

–1.75%

Source: Bloomberg, as of November 24, 2023

U.S. equity markets moved slightly higher in a light week of trading because of the Thanksgiving holiday. The major news was the release of Nvidia’s earnings on Tuesday. The stock dropped more than
3 percent despite beating its sales guidance of $16 billion by 13.3 percent for the quarter and beating earnings expectations of $4.02 per share by 19.3 percent. The company raised its sales guidance for next quarter by 13.7 percent, to $20.4 billion. The underwhelming reaction was attributed to uncertainty around sales to China amid growing U.S. chip export restrictions.

Fixed Income

Index

Month-to-Date

Year-to-Date

12-Month

U.S. Broad Market

3.31%

0.46%

0.20%

U.S. Treasury

2.49%

–0.29%

–0.49%

U.S. Mortgages

3.76%

–0.68%

–1.05%

Municipal Bond

4.68%

2.35%

3.25%

Source: Bloomberg, as of November 24, 2023

Bond markets were relatively calm in a light week of trading. Given FOMC comments reiterating a
higher-for-longer rate approach, the front of the yield curve lifted. The 2-year and 10-year Treasury yields rose 11.3 basis points (bps) and 2.7 bps, respectively, whereas the 30-year fell 1.9 bps.                                    

The Takeaway

  • Nvidia stock fell despite strong earnings and guidance.
  • Treasuries lifted slightly on the front end because of the FOMC’s higher-for-longer rate stance.

Looking Ahead

Economic data will be skewed toward consumers and spending this week as the holiday season kicks off. New home sales, consumer confidence, and personal spending reports are expected.

  • The week kicks off Monday with the release of new home sales for October. Economists expect a 4.8 percent drop as mortgage rates continue to be a headwind for prospective homebuyers.
  • On Tuesday, the Conference Board Consumer Confidence Index for November will be released. Consumer confidence is expected to fall for the fourth consecutive month.
  • Personal income and spending reports for October, set to be released Thursday, may provide additional context regarding what to expect for the holiday season. Personal income and spending are each set to rise 0.2 percent after increasing more than expected in September.
  • Finally, the week will wrap on Friday with the ISM Manufacturing index for November. Manufacturer confidence is expected to improve, in part due to the successful resolution of UAW strikes at the end of October.

 

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Pacific Crest Wealth Planning is located at 11209 Brockway Rd, Suite C-203, Truckee CA  96161 and can be reached at 530-563-5250.  John C. Manocchio, CFP®, CRPC® (CA Insurance Lic. #0H73423) is a Registered Representative and an Investment Adviser Representative with/and offers securities and advisory services through Commonwealth Financial Network®, member FINRA/SIPC, a Registered Investment Adviser.  Fixed insurance products and services offered through CES Insurance Agency

Authored by the Investment Research team at Commonwealth Financial Network.

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