Two things moving the stock market after last week’s Trump vs. Fed rally

Talk about a successful week.

Normally, when the Fed cuts interest rates, it would be a big topic of discussion.

But Thursday’s Fed meeting pales in comparison to Tuesday’s presidential election, where the winner was decided before the sun rose the next morning.

Wednesday’s stock market reaction to Republican Donald Trump’s victory over Democrat Kamala Harris was swift and strong. Dow, S&P500 and Nasdaq To an all-time high. The next day’s Fed rate cut was a tailwind for market bulls, sending the S&P 500 and Nasdaq higher. The Dow was flat on Thursday. On Friday, the Dow rose above 44,000 for the first time in history, and the S&P 500 index topped $6,000 for the first time in history. It closed just below these levels. All three stock benchmarks ended the week at record highs.

For the week, both the Dow and the S&P 500 rose more than 4.6%. They had their best week of the year and their first strong week in the last three weeks. The Nasdaq rose 5.7% for the week. The weekly increase in tech stocks was the strongest of the three indexes, but remained at its highest level since September. The top five sectors for the week were consumer goods, energy, industrials, financials and information technology.

This week’s key economic report, the October Consumer Price Index, will be released before the opening bell on Wednesday. Economists expect headline CPI to rise 2.6% annually, slightly higher than in September, according to estimates compiled by FactSet. Core interest rates, which exclude volatile food and energy prices, are expected to rise 3.3% year-on-year, in line with the previous month. The CPI’s housing-related component, which makes up about a third of the total index, will also be a key focus given how high the costs of housing inflation remain.

Although not as closely watched as the CPI, October’s producer price index, which will be released on Thursday, could have an impact on the market. Monthly PPI measurements are important to continue to monitor as they indicate the wholesale prices (often referred to as input costs) that businesses pay and whether they need to increase consumer prices to protect margins. . Economists expect headline PPI to rise 2.3% annually and core interest rates to rise 2.9% from a year ago, according to FactSet. Among other data points this week, October retail sales and October industrial production will both be released on Friday. . Retail sales provide insight into how consumers are doing and where their purchasing power is concentrated in the lead-up to the holiday shopping season. Approximately two-thirds of the country’s economy is driven by consumer spending. The Monthly Industrial Production and Capacity Utilization Report provides insight into manufacturing, mining, and electricity and gas businesses that have been under pressure for quite some time.

Home Depot will report its third-quarter results before the opening bell on Tuesday, but we want to hear how management sees the housing market on the ground.

Although we know that long-term government bond yields are rising and mortgage interest rates are rising accordingly, the benefits of strengthening housing that lead to increased sales of construction and renovation products may still be pushed out. There is. It was encouraging to see bond yields fall on Thursday and Friday after spiking on Wednesday. We expect the Fed to move into easing mode and the market odds to continue favoring another rate cut in December.

Additionally, Home Depot’s sales may have partially increased in the reported quarter and may increase further in the future, as insurance claims are completed and homeowners look to rebuild after the Hurricanes. It will come from the recovery process after “Helen” and “Milton.” That said, we are watching for the timing and predict that Home Depot will be a major beneficiary once the housing market begins to expand in earnest. Consensus estimates as of Friday called for Home Depot to report third-quarter sales of $39.24 billion and earnings per share of $3.64.

Disney will report before the bell on Thursday, as its experiences business has weakened recently as recent hurricanes forced the closure of its Florida theme park properties and consumers weary of inflation. , the focus will be on the company’s experiential business. Disneyland Paris may be affected by the Summer Olympics held in Paris during the quarter.

But Disney’s direct-to-consumer business should become a better story as profitability improves. The release of major content, such as the new season of the critically acclaimed TV series “The Bear” and the film “Inside Head 2,” which grossed approximately $1.7 billion worldwide, has driven subscriber growth. It should contribute. Consensus estimates as of Friday called for Disney’s fourth-quarter revenue of $22.44 billion and earnings per share of $1.10.

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