Stocks Continue Momentum Over Holiday-Shortened Week

November 27, 2023

Market Data as of Week Ending: 11/24/2023 unless noted otherwise

Stock prices continued their march higher as the S&P 500 gained 1.04% over the holiday-shortened week, marking the fourth consecutive positive week. With nearly all third-quarter results in as of Friday, the earnings growth rate for the S&P 500 is expected to be 4.3%, which would mark the first year-over-year earnings growth since Q3 of 2022. Returns were relatively even across the large-cap space, while value stocks lagged their growth counterparts across mid and small-cap. Small-cap companies continued their positive momentum but did lag their larger-cap peers for the week. Gains were once again relatively broad-based, with all 11 major economic sectors ending the week in positive territory. Traditionally, defensive sectors were the best performing, with health care and consumer staples, while energy, utilities, and information technology lagged. Foreign developed and emerging market stock prices were positive and posted mixed results versus their domestic peers.

U.S. Treasury yields finished the week slightly higher after healthy demand for 20-year U.S. Treasury bonds at auction sent yields lower at the beginning of the week. The 10-year U.S. treasury yield ended the week at 4.47% after reaching an intraday low of 4.37% on Wednesday. The longer end of the yield curve generally outperformed, while government bonds declined across the spectrum, underperforming corporate and high-yield bonds. Yields ended the week slightly lower for both U.S. Investment Grade Corporate and High Yield bonds, at 5.81% and 8.75%, respectively.

Economic data for the week was relatively light but did feature a couple of notable releases. The U.S. leading economic indicators index declined 0.8% in October, marking the 19th consecutive monthly decline, as elevated inflation and higher interest rates weighed on the reading. U.S. existing home sales fell 4.1% in October due to higher mortgage rates and lack of inventory – this marked its fifth straight monthly decline and is now at its lowest level since 2010. Durable goods orders fell 5.4% in October due to fewer contracts for Boeing passenger planes. Consumer sentiment improved slightly from its preliminary reading to 61.3 in November as consumers’ concern over inflation remains elevated. The S&P flash PMI reports showed the U.S. economy expanded at a relatively subdued pace in early November as the S&P services index rose to 50.8 while the S&P manufacturing index slid to 49.4, a three-month low. In an attempt to douse rate cut hopes, the ECB reiterated that its fight against inflation was not over, stating that rates could be steady over the next couple of quarters.

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