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!

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

by Jared Plotz, Director of Research

Markets took a breather this week following the post-election rally last week. The S&P 500 fell -2.1%, while the Nasdaq fell -3.2%. The 10-Year Treasury, a rate indicator, closed the week at 4.44%, up +14 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended up +3 bps at 4.47%. The rise in rates pressured fixed income securities back to pre-election levels.

Part of the rise in interest rates can be attributed to this week’s inflation readings. While the consumer index (CPI) rose +2.6%, in line with expectations, the producer index (PPI) rose +2.4%, a greater-than-expected uptick. Economists have thus increased their forecasts for the Fed’s preferred inflation gauge (PCE), to be released at the end of the month. Also, Fed Chair Powell recently stated that despite “moving to a more neutral setting over time… the economy is not sending any signals that we need to be in a hurry to lower rates.” As always, time will tell what pace and magnitude the committee ultimately takes, but we remain of the view that the Fed is biased towards “easing” and has plenty of room to go.

Quarterly earnings season will soon come to a close. With 85% of S&P 500 companies having already reported, aggregate revenues have risen +5% from a year ago, while earnings have risen +7%. This week brought positive results from Block (Square) and Disney. Next week will bring reports from Walmart (Tuesday), Lowe’s (Tuesday), Nvidia (Wednesday evening), and Intuit (Thursday evening). Next week also includes data releases of October housing starts and preliminary November manufacturing activity.

Lastly, a firm update: we are delighted to announce that Nat Beebe has been elected President of Ulland Investment Advisors. Jim Ulland is taking a medical leave, although he will still serve as CEO and Chairman of the company. We hope for his speedy return. Since I have been co-managing the equities side of portfolios with Jim for a number of years, client portfolios will still be managed under a watchful eye during Jim’s recovery.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.