Last Week
For what it’s worth, there’s something happening here, what it is isn’t exactly clear, but Wall Street traders stopped and took the market down (inspired by Buffalo Springfield’s “For What It’s Worth”). In fact, the stock market has posted its worst weekly performance since the start of September and has notched a negative week in three of the last four.
While we avoid discussing politics, the combination of tariff talk and concerns over some of the nominees to essential roles in the incoming administration contributed to investors’ not-so-peaceful and easy feelings. Additionally, the recent strong economic data (ironic given how the “terrible” economy was a key issue for voters) has dampened expectations for the size and pace of future interest rate cuts. Federal Reserve chair Jerome Powell stoked that fear on Thursday when he suggested that the central bank would not be “in a hurry to lower rates.” The odds still indicate that there will be a 25-basis point cut in December, but beyond that, it isn’t exactly clear.
The major economic reports last week raised more hawkish concerns than dovish hopes. The Friday Retail Sales report was generally positive at +2.8% year-over-year, not suggesting any consumer weakness. This followed the Thursday PPI report that was as-expected at +2.4% year-over-year but showed some stalling in the two-year progress of slowing inflation since late 2022 (see graph below).
For the week, the S&P slipped -2.1%, the Nasdaq Composite slid -3.1%, and the Russell 2000 sank -4%. Declining issues more than doubled advancing issues, with the Health Care sector getting whacked 5.75%. The yield on the 10-year Treasury jumped another 12-basis points to 4.43% and has increased 80-basis points over the last two months. The dollar gained 1.5% on the back of the higher interest rates, while gold slipped 1%. Crude oil was amongst the biggest losers, drilling down almost 3%. Our discussions with experts from the oil patch suggest that there is much ado about nothing regarding “drill, baby, drill,” as there is a global glut of oil & gas. On the other hand, an area of potential growth could come from the midstream companies engaged in the transport and storage stages. Many of those companies also offer attractive dividend yields.
This Week
Investors will continue to process all the uncertainty as we approach the holiday season. The housing market will be in focus early in the week, and manufacturing data at the end. Recent trends suggest weakness in both areas, with high mortgage and short-term interest rates contributing to the headwinds.
The downward trend remained on the Chicago Sports Scene. The Bears’ game-winning field goal attempt was blocked, resulting in their fourth loss in a row and a 4-6 record. The Bulls gave up more than 140 points on successive gains to drop to 5-9 on the season, and the Blackhawks are tied for last place. One bright spot is the University of Chicago Maroons Men’s basketball team, which is off to a 2-0 start.
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvestfunds.com.