Stocks Rally to 3rd Week of Gains – Fed Done Raising Rates? – Monday Morning Market Memo – November 20, 2023

Stocks Rally to 3rd Week of Gains – Fed Done Raising Rates? – Monday Morning Market Memo – November 20, 2023

The three major stock market averages all rose last week.  The Dow Jones Industrial Average added 1.9% to 34,947 – the NASDAQ Composite gained 2.4% to 14,125 – while the Standard & Poor’s 500 Index advanced 2.2% to 4,514.  This marked the third straight winning week for the major averages.

The primary driver behind the advance in the stock market last week was cooler-than-expected inflation data.  The Dow jumped nearly 500 points, (or 1.4%) Tuesday, the S&P rose almost 2%, and the NASDAQ gained around 2.3%, after the U.S. Bureau of Labor Statistics released the October Consumer Price Index.  The CPI was flat from the previous month and increased 3.2 percent over the last 12 months.  Both numbers were better-than-expected, sparking the broad stock market rally.

The cooling inflation data gave investors hope that Federal Reserve interest rate hikes are in the rearview mirror, and the Fed may end its rate hiking campaign.  According to the CME FedWatch Tool, probabilities are 99.8% the Federal Reserve will leave rates unchanged at their next policy meeting in December.

Bottom line, the softer inflation led to market conviction the Fed is done hiking rates, which led to a stock market rally!  Keep in mind going forward, even if the Fed is done raising rates, the next phase of market uncertainty will be regarding how long the Fed keeps rates this high.  Currently, markets are expecting interest rate cuts in the second quarter of 2024.

Looking to the week ahead, while earnings season is essentially complete, we’ll get a few notable reports to watch, with NVIDIALowe’sBest Buy, and Deere all scheduled to announce results.  Economic data scheduled to be released includes Leading IndicatorsExisting Home SalesDurable Goods and Consumer Sentiment.

Noting the schedule this week, the financial markets are closed Thursday in observance of Thanksgiving Day, and the stock market closes early on Friday (1:00 pm).  We hope you have a happy and enjoyable holiday weekend!


All the best – Southport Station Financial Management, LLC