The stock market experienced a significant rally last week following Donald Trump’s victory in the 2024 presidential election.
November UMich Consumer Sentiment Index up to 73 vs. 71 est. & 70.5 prior … current conditions fell to 64.4 vs. 64.9 prior; expectations rose to 78.5 vs. 74.1 prior pic.twitter.com/1UqmBpko9o
— Liz Ann Sonders (@LizAnnSonders) November 8, 2024
The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all posted impressive gains, with the S&P 500 and Dow rising more than 4.5% and the Nasdaq increasing by nearly 6%. This week, investors will be closely watching key economic indicators, including the October Consumer Price Index (CPI) and retail sales data.
From the @FT article, "Inflation worries seep back into US bond market."#economy #markets #inflation #federalreserve #econtwitter pic.twitter.com/K09P9f9hgz
— Mohamed A. El-Erian (@elerianm) November 9, 2024
The CPI, set for release on Wednesday, is expected to show headline inflation rising by 2.6% annually in October, compared to a 2.4% increase in September. Core CPI, which excludes food and energy prices, is projected to rise by 3.3% annually, matching September’s increase. Thursday will bring the release of October’s retail sales report, the final one before the holiday shopping season.
“America first” in one chart: if S&P 500 outperformance over Stoxx 600 is a useful barometer, Team Trump’s off to a strong start (albeit continuing a relentless trend …). In 2010 the S&P 500 to Stoxx 600 ratio was 4.2, today it is almost 12. (HT Goldman) pic.twitter.com/0ZXquDmfcI
— Holger Zschaepitz (@Schuldensuehner) November 9, 2024
Economists predict a 0.3% monthly increase in retail sales and a 0.3% rise in the control group of retail sales, which directly impacts GDP.
Investors anticipate key economic data
Corporate earnings will also be in focus this week, with Disney set to report its quarterly results on Thursday morning.
Investors will be paying close attention to the company’s streaming business, which has shown improvement despite declines in linear television. Recent price hikes and a crackdown on password sharing are expected to boost profitability in this segment. The stock market rally was particularly pronounced in Big Tech stocks, with companies like Apple, Alphabet, Microsoft, Amazon, and Nvidia reaching new highs.
Tesla, Nvidia, and Amazon outperformed the S&P 500, signaling high hopes for these companies in the current economic context. Small-cap stocks also benefited from the post-election rally, with the Russell 2000 index experiencing its best day in nearly two years and ending the week up more than 8%. However, investors remain cautious about immediately piling into small caps due to recent downward revisions in earnings estimates for these companies.
As the week unfolds, investors will be closely monitoring economic data and corporate earnings reports to gauge the strength of the economy and the sustainability of the recent stock market rally.
