Michael Reinking:
Hello, I'm Michael Reinking, Senior Market Strategist at the New York Stock Exchange, and this is Market Storylines. Every week we are here to keep you up-to-date on the key trends and events driving global markets. We are recording on Thursday afternoon, and here are this week's market storylines.
Now, over the last two weeks equity markets have been digesting the post-election gains. We have moved from the honeymoon phase where the rising tide lifted all boats to some more differentiation under the surface last week as President Trump began making nominations to his cabinet. Now, last week, most major US indices gave back about half of their post-election gains, with the S&P 500 testing some shorter-term moving averages and the high prior to the election. Now, adding to some of that weakness was a move higher in treasury yields, particularly at the long end of the curve, after some mixed inflation data and economic data that pointed to a continued resilience in the labor market and consumer spending.
Now, while Washington remains center stage this week, investors have been dealing with some increased geopolitical risk and the beginning of the end of the earnings season with key earnings from some large retailers and tech companies. Now, as Ukraine and Russia exchanged missile fire this week, that created some volatility in equity markets and did put a bid in some of the typical conflict playbook. Gold is bouncing after its worst week since 2021 while oil prices have also moved modestly higher. Now, the US dollar index continues its surge post-election, testing 107, the upper end of the recent range, that it's been in for basically the last two years. And treasuries have also caught a bid at the peak moments of concern, showing that they still maintain that safe haven status despite all of that talk of bond vigilantes. Now, that being said, yields are only modestly lower as there have been some hotter global inflation data and a hawkish commentary from Fed officials suggesting that the pace of rate cuts could slow.
Now, within equity markets, the initial knee-jerk reaction sent the S&P 500 down around 1%, testing last week's lows. As headlines continue to swirl, the index has retested that level a couple of times over the last few days, but we have bounced and that does show that we have this underlying bid beneath the tape. Now, one of the things that has helped markets is a round of solid earnings from some of the country's largest companies. Now, within retail, Walmart put up very strong results, raising guidance and seemingly humming on all cylinders. Now, the company is benefiting from an influx of higher-income customers who are seeking the value proposition, something that's also helped TJX over the last couple of years.
Now, the commentary from management teams has suggested that the consumer remains resilient, the more selective, and there has been a cautious optimism about the upcoming holiday shopping season, with some improvement in the discretionary spending categories. Now, there's also been a round of very solid tech earnings. Last night, the reigning largest company in the S&P 500, Nvidia, reported. Now, expectations were very high coming into this report and the company once again beat most street estimates but not by the wide margin seen over the last couple of years. Now, CEO Jensen Wong, continued to highlight the very strong demand, said that its new Blackwell Chip was now in full production, and did downplay some of the stories of server overheating that were in the press earlier this week.
Now, initially the stock did move lower overnight but it has recouped most of those losses throughout the day. There were also a couple of other solid tech reports, including Palo Alto and Snowflake, which is surging today after raising guidance and announcing a partnership with Anthropic. Now, as we're recording, most major indices have recouped a little more than half of last week's pullback, and this feels like a pretty healthy consolidation. Now, this week's biggest economic data is yet to come, with Global Flash PMIs released on Friday. Now, this is the first of the November economic data and these surveys were conducted after the election so it will be very interesting to see if there's an improvement in sentiment, which could lead to an increase in economic activity. Now, as we look forward to next week, the focus will very much shift to spending time with family and eating some Turkey, so things will likely slow down a bit here on the exchange.
The same mix of catalysts will remain in focus with tech and retail earnings, and the key economic data will be consumer confidence, personal income and spending, and there is some global inflation data, including PCE, the Fed's preferred gauge. Now, speaking of the Fed, the FOMC minutes will be released on Tuesday but it has become very clear that there are some varying opinions in the room and the Central Bank will proceed with caution. Now, I still think that the jobs report two weeks from now will be the key determinant factor as to whether the Fed cuts in December.
Now, that's going to do it for this week. Once again, thank you for spending some time with us today. Remember, you can watch Market Storylines on tv.nyc.com or on NYC YouTube's channel, or you can listen every Friday on the Inside the Icehouse Podcast Feed. On behalf of the NYC, I'd like to wish you and your families a happy and healthy Thanksgiving. Thanks for joining me, I'm Michael Reinking, I'll talk to you again next week.
Speaker 2:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither Ice nor is affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of [inaudible 00:06:10] clarity.