Market Update Week 47

Gordon Achtermann |
Categories
Investing

Market Recap

Week of November 18-23, 2024

 

The S&P 500 rose 1.7% after falling over 2% the week before. After spending the first half of the week mostly consolidating, they rallied on Thursday, led by a rotation* into cyclical** stocks.

The market benchmark ended Friday's session at 5,969.34 and is now up 4.6% for the month and 25% for the year.

On Wednesday, Nvidia, which has been the star of the year's bull run thus far, released a better-than-expected earnings report. Nevertheless, the tech sector's performance was mixed. Overall, utilities, industrial services, and non-energy minerals led all sectors in performance, while retail trade, health technology, and technology services lagged. Elsewhere, bitcoin continued to push higher, passing $99,000 on Friday. Gold and oil also rallied, with gold gaining over 4% after falling over 4.5% the week before and oil 6% after falling nearly 5% the week before.

* Rotation: financial reporters use this term to mean a shift in investor buying from one class to another.

** Cyclical: there are 3 types of stocks (1) Sensitive - stocks that experience greater price movement in response to interest rate changes than most (includes communication services, energy, industrials, and technology sectors). (2) Defensive - stocks that experience less price movement in response to economic changes (includes consumer staples, healthcare, and utilities sectors). (3) Cyclical - stocks that experience more price movement in response to economic changes (includes basic materials, consumer cyclicals, financial services, and real estate).

 

 

S&P 500 returns by style box and sector

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Holiday spending expected to cool to normal growth.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

***Chart of the Week source, JP Morgan

Looking at this chart, I am struck by the massive growth in 2020 and 2021(23% compounded in just 2 years.) This was 100% the impact of stimulus payments to combat unemployment due to the pandemic. Is it any wonder that people noticed when this went away? Compounding the issue, in 2022 and 2023, the increases were due entirely to price inflation.

Humans have a very short memory when it comes to economics (or any subject where their education is spotty at best) so is it any wonder that voters completely forgot that the stimulus saved us from a depression and instead felt anxious, resentful even, going into the election?

On the other hand, this (projected) real spending growth is being driven by rising real (after inflation) wages, which have been up steadily for 1.5 years. We should remember that the rising wealth gap and uneven wage growth will ensure that many hoseholds do not experience this.

 

All the Best,
Gordon Achtermann, CSRIC®, MBA, CFP®

Gordon@yourbestpathfp.com
703-573-7325


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