WEEKLY MARKET UPDATE 11/15/2024

After a tremendous post-election rally and new all-time highs, stocks stumbled into the weekend, down roughly 2% on the week.  Perhaps underlying some of this week’s market weakness, is a steady rise in intermediate-to-long-term rates.  Despite the Federal Reserve cutting short-term rates by another twenty-five basis points (0.25%) last week, longer-term interest rates such as the 10-year US Treasury have steadily climbed and are flirting with their highest levels since early July (4.5%).

Investors are also digesting a massive shift in policy and Trump’s cabinet nominees are being closely watched.  Thematic trades driven by political considerations have become quite popular.  Notable winners being financials, particularly the banks, as well as private prisons, and cryptocurrency.  Notable losers have been renewable energy, defense stocks like RTX or Lockheed Martin, and pharmaceutical companies, particularly those levered to vaccines or obesity drugs.

Next week, Nvidia reports on Wednesday while markets will continue to analyze Trump headlines and interest rate moves.

RED WAVE

With Congress officially going to the GOP we wanted to share a chart (see below) from Fidelity Investments that analyzes S&P 500 returns following election sweeps.  Per Fidelity’s Jurrien Timmer, since 1900 the 2-year equity return of the S&P 500 following a sweep has been positive 15 out of 19 elections and for just the Republicans, it has been 7 out of 8.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder

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