Last week’s financial market showed a generally positive trend across various sectors. The Dow Jones Industrial Average (DJI) experienced a notable uplift, trading higher with a 1.15% increase, reaching 34,283.10. In the commodities market, gold prices also saw an upward movement, registering a 0.38% rise, with the price standing at $1,939.90. Similarly, Brent crude oil prices exhibited a positive trend, increasing by 0.28% to $81.66.

Mega Cap Stocks: The Titans of the Market

The spotlight this week was firmly on the mega cap stocks. The Vanguard Mega Cap Growth ETF (MGK) saw an impressive jump of 3.4%, significantly outperforming the S&P 500’s gain of 1.3%. This disparity highlights the substantial influence these large companies have on the market.

S&P 500: A Display of Resilience

The S&P 500, often seen as a barometer for the overall market, demonstrated remarkable resilience. It rose 7.2% from its October 27 low, closing above the 4,400 mark on Friday. This uptick, amidst expectations of a pullback, underscores the market’s unpredictable nature.

The Struggle of Smaller Indices

In contrast to the robust performance of the S&P 500, smaller indices faced challenges. The Russell 2000 fell by 3.2%, and the S&P Mid Cap 400 declined by 1.6%, reflecting the heightened vulnerability of smaller stocks in volatile market conditions.

Sector Performance: Tech and Communication in the Lead

Diving into specific sectors, technology and communication services stood out with gains of 4.8% and 2.2%, respectively. On the other end of the spectrum, the energy sector dipped by 3.8%, while utilities and real estate sectors dropped by 2.6% and 2.1%, respectively.

Influence of Market Rates and Federal Reserve

Market rates experienced notable shifts following Treasury auctions, with the 2-yr note yield climbing 19 basis points to reach 5.05%. The 10-yr note yield also increased, rising seven basis points to 4.63%. These movements were further influenced by comments from Fed Chair Powell, emphasizing the Federal Reserve’s significant impact on market dynamics.

Daily Market Movements: A Closer Look

• Monday: The market experienced consolidation, with major indices supported by gains in mega cap stocks. Market rates also played a role in tempering the market’s movement.
• Tuesday: Relative strength in mega cap stocks again propelled major indices, with the Nasdaq Composite rising by 0.9% and the S&P 500 increasing by 0.2%.
• Wednesday: The market had a lackluster performance, with a steady decline in the morning but a recovery in the afternoon, influenced by a $40 billion 10-yr note sale.
• Thursday: The market reacted negatively to a weak 30-yr bond auction and comments from Fed Chair Powell, leading to a downturn in major indices.
• Friday: The week ended on a positive note, with a rally driven by mega-cap and semiconductor stocks, buoyed by a strong performance from Taiwan Semiconductor Manufacturing Co. (TSM).

Concluding Thoughts

This week in the stock market was a testament to the complex interplay of various factors – from the dominance of mega-cap stocks to the nuanced impacts of sector performance and federal policies. It’s a reminder of the market’s intricate nature, where each day can bring new surprises and challenges. As investors and observers, staying informed and adaptable is key to navigating this ever-changing landscape.

CALENDAR & MOVERS

• Tuesday: CPI (MoM) (October)
• Wednesday: Retail Sales (MoM) (October)
• Earnings
• Middle East Tensions

Key Economic Event: Consumer Price Index Report

• October CPI Report: A major focus next week will be the Consumer Price Index (CPI) report for October. Investors are keenly awaiting this data for insights on interest rate directions.
• Federal Reserve’s Stance: Following Federal Reserve Chairman Jerome Powell’s remarks at an International Monetary Fund conference, there is heightened attention on the Fed’s potential actions. Powell indicated that the Fed would not hesitate to tighten monetary policy if data supported a hike.
• Market Expectations: Despite markets currently pricing in less than a 20% probability of a December rate increase, a stronger-than-expected CPI report or a surge in retail sales could shift these expectations.
• International Diplomacy Impact: President Biden’s mid-week meeting with China’s leader Xi Jinping is also under the investor’s radar, particularly for those in the tech sector.

Earnings Calendar

• Earnings Spotlight:
  • Monday, November 13: Tyson Foods (TSN) and Tower Semiconductor (TSEM).
  • Tuesday, November 14: Home Depot (HD), Sea Limited (SE), On Holding AG (ONON), and Vipshop (VIPS).
  • Wednesday, November 15: Cisco (CSCO), TJX Companies (TJX), Palo Alto Networks (PANW), Target (TGT), JD.com (JD), and XPeng (XPEV).
  • Thursday, November 16: Walmart (WMT), Alibaba (BABA), Applied Materials (AMAT), and Macy’s (M).
  • Friday, November 17: BJ’s Wholesale Club Holdings (BJ) and Spectrum Brands (SPB).

Dividend Watch

• Projected Dividend Increases: Companies expected to raise their quarterly dividends include:
  • Apple Hospitality (APLE): To $0.10 from $0.08.
  • Amkor Technology (NASDAQ:AMKR): To $0.090 from $0.075.
  • Aecom (ACM): To $0.20 from $0.18.
  • Nike (NKE): To $0.37 from $0.34.

COMMODITIES

ENERGY

Despite ongoing tensions in the Middle East, oil prices have shown a downward trend. Brent crude is currently priced at $86 per barrel, while US WTI stands at $81.50. This easing of prices is partly attributed to disappointing economic data from the US and a rise in oil inventories. Interestingly, the geopolitical concerns have had a limited impact on oil prices, primarily because there have been no disruptions in supply. Meanwhile, in Europe, natural gas prices have found some stability, hovering around 48 EUR/MWh.

GOLD AND PRECIOUS METALS

The gold market remains buoyant, with prices hovering near $2,000 per ounce. This resilience in gold prices is largely due to ongoing geopolitical tensions, a decline in bond yields, and sustained interest from central banks. Notably, central banks, with China at the forefront, have been actively increasing their gold reserves. In the third quarter alone, approximately 340 tonnes were added, bringing the total since the start of the year to around 800 tonnes. In other metal news, copper prices in London have climbed to $8140, benefiting from a weakening US dollar.

CRYPTOCURRENCY

Bitcoin is currently hovering around the $35,000 mark, experiencing a slight decrease of -0.60% since Monday. Meanwhile, Ether, the second most valuable cryptocurrency, is maintaining stability, remaining just below $1,800. In significant crypto news, all eyes are on Sam Bankman-Fried, who was convicted on seven charges, including money laundering and fraud, in the high-profile FTX case this week. He faces a potential sentence of up to 115 years in prison. His sentencing is set for March 28, 2024, and it’s anticipated that there will likely be an appeal, adding another chapter to this ongoing story in the cryptosphere.