Stocks gave back some of their post-election gains as concerns over the pace of interest rate cuts by the Federal Reserve emerged based on comments from Fed Chair Jerome Powell. For the week, the S&P 500 Index was -2.0%, the Dow Jones -1.2%, and the NASDAQ -3.4%. The Financial, Energy, and Utility sectors led the market, while the Health Care, Materials, and Technology sectors lagged. The 10-year U.S. Treasury note yield increased to 4.441% at Friday’s close versus 4.228% the previous week.
In a speech last week, Powell said the economy is not sending any signals that the Federal Reserve needs to be in a hurry to lower rates. While he confirmed that the Fed is planning to return to a neutral stance on monetary policy, it will be a data dependent path. October Consumer Price Index (CPI) data showed inflation +0.2% month-over-month and +2.6% year-over-year. Core CPI, which excludes food and energy prices, was +0.3% month-over-month and +3.3% year-over-year. Current CME Fed funds futures still show a 0.25% reduction predicted for the December Federal Open Market Committee (FOMC) meeting on December 18th. At that point, the FOMC should issue an updated Summary of Economic Projections, providing a road map for the first quarter of 2025. Fed funds futures for the first quarter currently show a 0.25% reduction in interest rates.
We are 93% of the way through the third quarter earnings reporting period. Reports continue this week with 14 companies in the S&P 500 Index scheduled to release results. Third quarter earnings growth is currently forecast at 5.4% year-over-year with revenue growth of 5.5%. Full-year 2024 earnings for the S&P 500 Index are expected to grow by 9.3% with revenue growth of 5.0%.
In our Dissecting Headlines section, we look at the Thanksgiving travel forecast.
The American Automobile Association (AAA) projects 79.86 million travelers will head 50 miles or more from home over the Thanksgiving holiday travel period, a 2.1% increase versus 2023.
Volumes are expected to increase across all major modes of travel. Auto, the largest category, is expected to increase 1.9% year-over-year to 71.74 million travelers. Air travel is expected to increase 1.9% to 5.84 million. All other travel, which includes train, bus, and cruise, is expected to increase 9.1% to 2.28 million, with cruise bookings 20% higher year-over-year.
Annual changes in cost of travel varies. The current average price of regular gasoline nationwide is $3.071 per gallon, down 7.5% year-over-year. The average price of a domestic flight is 3% higher year-over-year while international flights are down 5%. Based on data from the recent Consumer Price Index (CPI) report, hotel rooms are 0.1% lower year-over-year.
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Not in a Hurry
Stocks gave back some of their post-election gains as concerns over the pace of interest rate cuts by the Federal Reserve emerged based on comments from Fed Chair Jerome Powell. For the week, the S&P 500 Index was -2.0%, the Dow Jones -1.2%, and the NASDAQ -3.4%. The Financial, Energy, and Utility sectors led the market, while the Health Care, Materials, and Technology sectors lagged. The 10-year U.S. Treasury note yield increased to 4.441% at Friday’s close versus 4.228% the previous week.
In a speech last week, Powell said the economy is not sending any signals that the Federal Reserve needs to be in a hurry to lower rates. While he confirmed that the Fed is planning to return to a neutral stance on monetary policy, it will be a data dependent path. October Consumer Price Index (CPI) data showed inflation +0.2% month-over-month and +2.6% year-over-year. Core CPI, which excludes food and energy prices, was +0.3% month-over-month and +3.3% year-over-year. Current CME Fed funds futures still show a 0.25% reduction predicted for the December Federal Open Market Committee (FOMC) meeting on December 18th. At that point, the FOMC should issue an updated Summary of Economic Projections, providing a road map for the first quarter of 2025. Fed funds futures for the first quarter currently show a 0.25% reduction in interest rates.
We are 93% of the way through the third quarter earnings reporting period. Reports continue this week with 14 companies in the S&P 500 Index scheduled to release results. Third quarter earnings growth is currently forecast at 5.4% year-over-year with revenue growth of 5.5%. Full-year 2024 earnings for the S&P 500 Index are expected to grow by 9.3% with revenue growth of 5.0%.
In our Dissecting Headlines section, we look at the Thanksgiving travel forecast.
Financial Market Update
Dissecting Headlines: Thanksgiving Travel Forecast
The American Automobile Association (AAA) projects 79.86 million travelers will head 50 miles or more from home over the Thanksgiving holiday travel period, a 2.1% increase versus 2023.
Volumes are expected to increase across all major modes of travel. Auto, the largest category, is expected to increase 1.9% year-over-year to 71.74 million travelers. Air travel is expected to increase 1.9% to 5.84 million. All other travel, which includes train, bus, and cruise, is expected to increase 9.1% to 2.28 million, with cruise bookings 20% higher year-over-year.
Annual changes in cost of travel varies. The current average price of regular gasoline nationwide is $3.071 per gallon, down 7.5% year-over-year. The average price of a domestic flight is 3% higher year-over-year while international flights are down 5%. Based on data from the recent Consumer Price Index (CPI) report, hotel rooms are 0.1% lower year-over-year.
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied upon for, tax, legal or accounting advice.