It has been a banner week for the stock market, which has been enveloped in post-election enthusiasm. Yesterday’s decision by the FOMC to cut the target range for the fed funds rate by 25 basis points to 4.50-4.75%, while not surprising, was just icing on the cake.
Fed Chair Powell threw on a few sprinkles, too, by leaving the door open for another rate cut in December — or, we should say, he didn’t go out of his way to make the market think it was unlikely. According to the CME FedWatch Tool, there is a 71.5% probability of another 25-basis points cut at the December meeting versus 66.6% yesterday.
At the moment, there is a 100% chance of the market opening today’s session on a mixed note. The S&P futures are down five points and are trading 0.1% below fair value, the Nasdaq 100 futures are down 58 points and are trading 0.3% below fair value, and the Dow Jones Industrial Average futures are up 24 points and are trading 0.1% above fair value.
The mixed disposition, which stretches to the Treasury market, is nothing more than a cooling-off phase following some big gains for the indices — and some huge gains for individual stocks — following the election. The 2-yr note yield is unchanged at 4.22% and the 10-yr note yield is down two basis points to 4.32%.
Entering today, the Russell 2000 is up 7.8% for the week, the S&P Midcap 400 is up 5.8%, the Nasdaq Composite is up 5.6%, the S&P 500 is up 4.3%, and the Dow Jones Industrial Average is up 4.0%.
NVIDIA (NVDA) and Sherwin-Williams (SHW) begin trading today as Dow Jones Industrial Average components, replacing Intel (INTC) and Dow Inc. (DOW). That news will be interspersed with a lot of other corporate news that revolves around earnings results.
Once again, we’ll refer readers to our Earnings Results and Earnings Guidance Calendar pages for the full rundown of companies reporting after yesterday’s close and before today’s open. There are just too many to cover here, yet the list features many well-known names like Airbnb (ABNB), Expedia (EXPE), DraftKings (DKNG), Pinterest (PINS), Rivian (RIVN), Toast (TOST), Sweetgreen (SG), Block (SQ), Paramount Global (PARA), Baxter (BAX), and Motorola Solutions (MSI).
Today’s economic calendar is light with the preliminary November University of Michigan Index of Consumer Sentiment (Briefing.com consensus 70.6; prior 70.5) at 10:00 a.m. ET the only report on the docket. There won’t be any economic releases on Monday since the Treasury market will be closed for Veterans Day (the stock market will be open).
China for its part closed out the National People’s Congress with an announcement that it will be instituting a $1.4 trillion local government debt swap program. Reports indicate that this was a relatively disappointing development since the stimulus impact doesn’t translate directly as a boon for consumer spending.
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Originally Posted November 8, 2024 – Cooling off after hot post-election run
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