November 30, 2024 Market Update

The U.S. stock market continued their upward market, with major indices reaching new highs.  Smaller companies led the way, with the Russell 2000 Small Cap index ending the week with a 1.2%% gain.  The Nasdaq overcame headwinds triggered by lackluster earnings reports by Dell and Hewlett Packard and concerns that President-elect Trump’s tariff proposals could lead to higher costs and supply chain disruptions.

In the bond market, U.S. Treasuries experienced a significant rally, with the 10-year yield dropping to 4.27% and the 30-year yield reaching a six-week low of 4.44%.  The drop in yields was attributed to strong demand, subdued inflation data, and the nomination of Scott Bessent as Treasury Secretary.

Although trading was shortened last week, there were several significant economic updates.  Reports on the Federal Reserve’s preferred inflation gauge, initial jobless claims, and third-quarter economic growth gave investors much to ponder over the Thanksgiving holiday. 

The Bureau of Economic Analysis (BEA) latest estimate of U.S. economic growth reported that America’s gross domestic product expanded at a solid annualized pace of 2.8% in the third quarter.  That was in line with expectations.  This growth was primarily driven by robust consumer spending, which increased at a 3.5% annual rate.

Meanwhile, the Department of Labor announced that initial claims for unemployment benefits fell by 2,000 to a seasonally adjusted 213,000 for the week ending November 16th, below the anticipated 220,000.  This marks the lowest level since April 2024 and signaled continued strength in the labor market.

The most anticipated release was October’s Personal Consumption Expenditures (PCE) Price Index.  The report showed prices rising 0.2% for the month, with a 12-month inflation rate of 2.3% — both in line with expectations.  Notably, personal income jumped 0.6%, doubling the 0.3% estimate.

Taken together, these reports suggest that the Federal Reserve is likely to continue its policy to gradually reduce interest rates.  Minutes from its November 6th – 7th meeting, also released last week, stated “Participants generally agreed that a gradual approach to reducing the federal funds rate would be appropriate, given the current economic conditions and the need to balance the risks to the Committee's dual mandate objectives."

That’s all for now.  Have a great weekend and invest wisely my friends.