President Donald Trump looks on as his nominee for Federal Reserve chairman Jerome Powell walks to the podium during a news conference in the Rose Garden of the White House on November 2, 2017 in Washington, DC.
Drew Angerer | Getty Images
Talk about an eventful week.
Normally when the Fed cuts interest rates, it’s a big deal.
Thursday’s Fed meeting, however, pales in comparison to Tuesday’s presidential election, which produced a winner before the sun rose the next morning.
Performance since the close on November 1
Stock market reaction to Republicans on Wednesday Donald Trumpdefeat the democrats Kamala Harris Quickly and forcefully, send Dow Chemicalthis S&P 500 Index and Nasdaq A record high. The Federal Reserve’s interest rate cut the next day added fuel to the market bulls, with the S&P 500 and Nasdaq rising. The Dow was flat on Thursday. On Friday, the Dow Jones surpassed 44,000 points for the first time and the S&P 500 topped 6,000 points for the first time. They closed slightly below these levels. All three equity benchmarks ended the week at record highs.
The Dow Jones and S&P 500 both rose more than 4.6% this week. They had one of their best weeks of the year and their first positive few in the last three years. The Nasdaq rose 5.7% this week. The tech-heavy index’s weekly gain, while the strongest of the three, was only its best since September. This week, consumer discretionary, energy, industrials, financials and information technology are the top five sectors.
S&P 500 Index sectors this week
| department | WTD changes | Year-to-date changes |
|---|---|---|
| consumer discretionary | 7.62% | 22.81% |
| vitality | 6.16% | 12.16% |
| industry | 5.93% | 24.41% |
| finance | 5.53% | 30.46% |
| information technology | 5.44% | 36.14% |
| Communication services | 3.72% | 34.93% |
| real estate | 2.67% | 9.35% |
| health care | 1.57% | 9.95% |
| Material | 1.46% | 9.99% |
| Utilities | 1.20% | 24.72% |
| consumer staples | 1.20% | 14.31% |
source: fact set
- Last week, we sold shares of industrial laggards Honeywell turn into strength three timeslowering the position to the level Jim Cramer said won’t hurt us. Wednesday, already running Wells Fargo and Morgan Stanley Both percentages surged by double digits after Trump won, and our discipline is called Let’s make a profit, so we did. BlackRock, one of our new positions, took away some of the bank stock gains by not participating in Wednesday’s rally in financial stocks, Bought some more Shares of the world’s largest asset managers.
we say last weekend The risk to the market is not who wins, but whether the winner wins decisively. That’s exactly what we got.
Wall Street, however, has traditionally favored prolonged gridlock in Washington, a situation caused by a divided Congress or a White House controlled by one party and Capitol Hill controlled by another. The exact combination is still up in the air. While the presidential race was quickly decided and Republicans flipped the Senate, the House race remained too close to call. According to NBC News. As of Sunday afternoon, Republicans needed to win six of them to gain a majority.
Only time will tell how the balance of power will play out and whether that will be good or bad for stocks. But one thing we do know is that Trump likes to grade himself on market performance. During Trump’s first term, from Inauguration Day 2017 to his last day in office, the S&P 500 rose 67%. Mr. President, unless something catastrophic happens Joe Biden Vice President Harris will hand Trump the baton of a healthy economy, moderate inflation and a strong stock market.
In the coming week, Wall Street and the Federal Reserve will pay close attention to two government inflation reports. The financial reporting season begins to end, with only two club names left. home depot and disneyreporting quarterly results.
economy
This week’s key economic report, the October Consumer Price Index, will be released before the market opens on Wednesday. Economists expect headline CPI to rise 2.6% annually, slightly higher than in September, according to estimates compiled by FactSet. The core interest rate, which excludes volatile food and energy prices, is expected to increase by 3.3% on year, unchanged from last month. The housing component of the CPI, which accounts for about one-third of the entire index, will also be a focus given the stickiness of housing inflation costs.
- While Thursday’s producer price index for October isn’t as closely watched as the consumer price index (CPI), it could move markets. Monthly PPI readings remain important because they show the wholesale prices businesses are paying, often called input costs, and whether they need to raise consumer prices to protect profits. According to FactSet, economists expect overall PPI to increase by 2.3% annually and core interest rates to increase by 2.9% annually.
- In other data this week, October retail sales and October industrial production are both released on Friday. Retail sales give us a sense of where consumers are at and where they are focusing their purchasing power heading into the holiday shopping season. About two-thirds of the nation’s economy is driven by consumer spending. The monthly Industrial Production and Capacity Utilization report provides insight into the manufacturing and mining, electric and natural gas utility sectors, which have long been under pressure.
benefit
For Home Depot, which reports third-quarter earnings before the bell on Tuesday, we wanted to hear what management actually thinks about the housing market.
Home Depot year to date
We know that long-term bond yields have been rising and pushing mortgage rates back up along with them – so the benefits of increased sales of construction and renovation products from a stronger housing market may still be ruled out. We were pleased to see bond yields fall on Thursday and Friday after surging on Wednesday. We hope that the Fed will continue its easing mode and the market may cut interest rates again in December.
- Additionally, the recovery process following Hurricanes Helen and Milton likely boosted Home Depot’s sales, partly in the reported quarter and potentially more in the future, as insurance claims are processed and homeowners look to rebuild. That said, we’re biding our time and predicting that Home Depot will be a major beneficiary once the housing market really starts to change. As of Friday, consensus forecasts for Home Depot were for third-quarter sales of $39.24 billion and earnings per share of $3.64.
Disney year to date
Disney reports before the bell on Thursday that its experiences business will be in focus as it has softened recently as hurricane activity forced Florida theme parks to close and consumers grew weary of inflation. Disneyland Paris may experience some negative impacts from the Summer Olympics taking place in Paris this season.
- However, Disney’s direct-to-consumer business should get better as profitability improves. The release of major content such as the new season of the critically acclaimed TV series “Bear” and the movie “Inside Out”, which grossed nearly $1.7 billion worldwide, should help increase subscriber numbers. As of Friday, consensus forecasts for Disney’s fourth-quarter sales were $22.44 billion and earnings per share of $1.10.
next week
Monday, November 11
- Pre-market gains: Monday.com (MNDY), Aramark (ARMK)
- After the Ring: IAC (IAC)
Tuesday, November 12
- Before the bell rings: home depot (HD), Shopify (SHOP), Hertz (HTZ), Tyson Foods (TSN), AstraZeneca (AZN)
- After-hours: Spotify (SPOT), Occidental Petroleum (OXY), Rocket Companies (RKT), Skyworks (SWKS)
Wednesday, November 13
- 8:30 a.m. ET: Consumer Price Index
- After-hours: Cisco (CSCO), Beazer Homes (BZH)
Thursday, November 14
- 8:30 a.m. ET: Producer Price Index
- 8:30 a.m. ET: Initial jobless claims
- Before the bell rings: disney (DIS), JD.com (JD), Advanced Automotive Parts (AAP)
- After the Bell: Applied Materials (AMAT)
Friday, November 15
- 8:30 a.m. ET: Retail Sales
- 9:15 a.m. ET: Industrial production and capacity utilization
- Pre-market: Alibaba (BABA)
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