U.S. stock futures declined after a strong rally last week, with investors taking profits amid ongoing economic concerns and upcoming Federal Reserve rate cuts. Oil prices rose following OPEC+ plans to maintain output levels, while Bitcoin and other commodities experienced mixed movements. Retail sales hit a record online, but market analysts warn of potential overreactions. The market's recent performance suggests cautious optimism for December, with focus on the Fed's upcoming decision.
The S&P 500 Index recorded its second-best November since 1980, surging 8.9% and fueling hopes for further gains. The rally was part of a broader market surge triggered by a plunge in bond yields and optimism that the Federal Reserve will pivot to easing. The Nasdaq 100 Index also had its strongest month since last year, driven by Big Tech. However, investors should be cautious of concentration risk and potential tech stock slumps at year-end. The Fed's upcoming rate decision and inflation figures will also be key factors to watch.
The stock market continued its strong November rally as investors speculated that the Federal Reserve would successfully manage a soft landing for the economy, with signs of cooling inflation. The S&P 500 approached 4,600, marking a nearly 10% increase for the month. Treasury two-year yields dropped, indicating expectations of a rate cut by May.
The U.S. stock market is expected to continue its momentum into the final six weeks of 2023 and potentially build on that strength into year-end, according to Michael Arone, chief investment strategist at State Street. While there are no guarantees, historical trends suggest that momentum tends to beget more momentum, indicating a potentially healthy December and beyond for the stock market.
Global stocks are on track for their best month in over three years as markets around the world, including China and Latin America, have rallied in November. Investors are hopeful for rate cuts by the Federal Reserve, contributing to the positive performance of international equities.
S&P 500 futures were little changed as investors aimed to extend November's rally, with futures tied to the broad-market index inching lower. In after-hours trading, Cisco Systems dropped 11% after offering weak guidance, while Palo Alto Networks shed 5% due to a dismal forecast. The recent inflation data suggests the Federal Reserve may halt interest rate hikes, contributing to the market's positive sentiment. Hong Kong's Hang Seng index fell 1.81% after a previous session of gains. UBS expects the Fed to cut interest rates by 275 basis points next year. The U.S. and China have agreed to resume high-level military communication, with President Biden stating the need to ensure competition does not escalate into conflict. The major indexes are on track to finish the week higher, and Deutsche Bank warns that mega-cap banks could face challenges as rates fall. Goldman Sachs has released its official 2024 outlook.
