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Weekly Market Update for November 22, 2024
by Jared Plotz, Director of Research
Major equity indices returned to growth this week. The S&P 500 rose +1.68%, while the Nasdaq climbed +1.73%. Industries that outperformed the broader move included energy, financials, and real estate, while laggards included healthcare, airlines, and some parts of both retail and technology. The 10-Year Treasury, a rate indicator, closed the week at 4.41%, down -3 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended up +2 bps at 4.49%. On the economic side, November manufacturing showed rising optimism and a pickup in hiring, while October housing starts slowed slightly due to the recent pick up in interest rates.
Walmart and Lowe’s provided a somewhat upbeat picture of consumer spending this week, while locally-based Target hit a rough patch. Walmart sales grew at a quicker pace than anticipated, jumping 5% from a year ago, partly driven by market share gains amongst mid- and upper-income groups. Meanwhile Target saw sales growth of just 1%, noting customers traded down to value brands and lower price points. Lowe’s sales had been declining, but the pace of decline narrowed as “do-it-for-me” professional sales, along with margins, continue to be robust within home improvement. A decline in interest rates would help Lowe’s by enabling customers to take on higher-expense projects via financing. Overall, these results reinforce the recent trend of consumers returning to a more normal (slower) level of spending while being more cost-conscious.
On Wednesday, Nvidia reported over 90% sales growth and 100% profit growth versus a year ago, exceeding expectations. Demand for their next-generation Blackwell chips far outpaces capacity over the next 12 months. Management noted they are already shipping more Blackwell units than anticipated, contrary to market chatter that suggested overheating of chips may have delayed the rollout. Guidance for the next quarter implies growth of 70%, but the stock reaction to the quarter was muted (ending the week unchanged) given a high bar of a “beat and raise” quarter.
Next week brings several notable data releases, such as October new home sales and pending home sales, durable goods orders, and personal consumption expenditures (an inflation gauge). A few S&P 500 companies will report earnings, including Dell, Hewlett Packard, and Best Buy. Our office will be closed on Thursday for the Thanksgiving Day holiday, and will be open until noon on Friday. We wish everyone a wonderful Thanksgiving!
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