The stock market rose last week, making the long holiday weekend more enjoyable for investors. The Dow Jones Industrial Average added 1.4% to 44,911. The Standard & Poor’s 500 Index and the NASDAQ Composite each gained 1.1%, to 6,032 and 19,218, respectively. Both the Dow and the S&P finished last week at new record highs. For November as a whole, it was the best month of the year for the Standard & Poor’s 500 Index. Also of note is that the market rally is broadening out, with the Russell 2000 small cap index rising 1.2% last week and hitting a record high.
Factors behind the continuing market rally include momentum buying (the trend is your friend), hopes for tax cuts and deregulation during the next administration, and expectations that the Fed will continue to lower interest rates. Stock market investors typically like lower interest rates as they stimulate the economy and raise the Present Value of future earnings.
According to CME FedWatch, the probability is now 62% the Federal Reserve will cut interest rates by ¼ percentage point at their policy meeting later this month. Beyond that, investors are expecting a pause in rate cuts, predicting the Fed will make no changes to interest rates at their January meeting.
Looking to the week ahead, we’ll get the highly important and often market moving Jobs Report for November. This is a key read on the health of the U.S. economy and is closely watched by the Federal Reserve as it is key in determining monetary policy. Market expectations are the U.S Bureau of Labor Statistics will report the economy added 200,000 jobs last month and that the unemployment rate ticked up a notch to 4.2%.
Earnings Season is winding down, but some fresh reports out this week include Salesforce, Dollar Tree, Dollar General, Campbell’s and Ulta Beauty.
As always, please contact us with any questions you may have or if you would like to schedule a meeting.
All the best – Southport Station Financial Management, LLC