The Week That Was, The Week Ahead: Macro & Markets, November 17, 2024

Everything to Know about Macro and Markets

Stock markets slipped to a weekly loss after the post-election rally fizzled out on profit-taking, future fiscal policy uncertainty, and cautious signs from the Federal Reserve. The S&P 500 (SPX) fell by 2.08% on the week, its third losing week out of the last four, and the Dow Jones Industrial Average (DJIA) declined by 1.24%. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) dropped by 3.15% and 3.42%, respectively. 

The Fed Is in No Hurry to Cut

Stocks lost ground mid-week after a slate of data reflected the continued resilience of the U.S. economy. While the CPI was in line with expectations, producer-prices inflation—both the headline number and the core index, which excludes volatile food and energy prices—was above estimates on an annual basis. In addition, October’s retail sales report, which included a large upward revision to the prior month’s data, reflected the persistent resilience of consumers, adding question marks over further Fed policy steps.

Jerome Powell’s comments last week indicated that policymakers are now on a more gradual path of monetary easing. The Fed Chair stated that the economy continues to show strength while the job market remains healthy, with the unemployment rate still well below historical averages. The head of the U.S. central bank added that “the economy is not sending any signals that we need to be in a hurry to lower rates,” sparking concern in markets that the Fed may not be cutting rates as much as previously expected. The odds of a rate cut in December plunged below 60%, after previously hitting recent peaks near 80% in futures trading.

Trump 2.0 Policy Implications

The stock market’s loss of post-election momentum was exacerbated by the uncertainty surrounding policy issues in Trump’s second term. The various implications for corporate earnings were reflected by the wide dispersion of sector performances, with financial and energy stocks continuing upwards on the outlook for looser regulations and easier M&A approvals. On the other hand, healthcare stocks were the biggest losers last week following news that Trump has nominated Robert F. Kennedy, Jr. – a vaccine skeptic and a vocal critic of the pharmaceutical industry and public health programs – to head the Health and Human Services Department (HHS).

In addition, the hotter-than-expected PPI report drew investor attention to the incoming administration’s tariff policies, which may add to producer-price volatility in the short term as businesses adjust their supply chain management due to the risk of tariffs. However, tariffs are not necessarily inflationary, as their impact on consumers is industry-specific and generally doesn’t last for more than a few months. Thus, after companies adjusted for Trump’s tariff policies in 2018 and 2019, the prices of the tariffed goods actually fell. Still, the economic setup is different this time around, which muddies the outlook and injects additional uncertainty for investors and analysts to digest.

We have now entered into a seasonally strong period for the markets, as November and December historically have been positive months for stock performance, and even more so in presidential election years. However, given that the S&P 500 has gained over 23% year to date, some of the returns may been pulled forward. While the fundamentals, such as corporate earnings growth, continue to underpin the rally, policy uncertainty will continue to weigh on markets, likely sparking many more bouts of volatility.

Stocks That Made the News

¤ Financials and Energy were the only sectors to end the week in the green, with Utilities closing flat. The Healthcare sector suffered the largest loss, followed by the Technology sector. While all sectors were impacted by the prospect of slower rate cuts, healthcare stocks were particularly hard hit by Trump’s nomination of Robert Kennedy to head the HHS, and tech stocks were dragged down by profit-taking and tariff uncertainty.

¤ AbbVie (ABBV) experienced the steepest weekly loss among the Healthcare stocks, as on top of the general sector’s troubles, investor sentiment was hit by the news about the failure of its new schizophrenia drug in late-stage trials.

¤ Chipmakers’ shares struggled, as Applied Materials (AMAT) added to negative investor sentiment. The largest U.S. maker of chip-manufacturing equipment suffered its worst stock decline in a month after its revenue guidance did not meet market expectations.

¤ The shares of the “Magnificent Seven” megacaps were in the red for the week, including Tesla (TSLA) which reversed last week’s surge on news that the Trump administration is planning to end the $7,500 consumer tax credit for EV purchases.      

¤ Palantir (PLTR) was a notable positive outlier in the tech stocks’ sea of red, with a surge of over 10% for the week. The stock was lifted to a new record after the big data analytics company announced that it would switch its listing from the NYSE to the Nasdaq, setting the expectations for inclusion in the Nasdaq-100, which would lead to increased buying from funds tracking the benchmark.

¤ Disney (DIS) was another notable gainer with its stock soaring after a strong earnings report, which included a higher-than-expected EPS and a surprise jump in operating income.

Upcoming Earnings and Dividend Announcements

The Q3 2024 earnings season is winding down, but many newsworthy earnings releases are still scheduled for this week.

Specifically, this week’s – and the season’s – highlight is Nvidia (NVDA), which is scheduled to release its fiscal Q3 2025 results on Wednesday, November 20^th.

The stock market’s most important company will probably steal investor attention from retail giants Walmart (WMT), Dollar Tree (DLTR), Target (TGT), TJX Companies (TJX), Lowe’s (LOW), and Ross Stores (ROST), which will report their quarterly results starting Tuesday, November 19^th. Recent retail data points to a possible improvement in the earnings of the industry players.

Other notable earnings releases this week are coming from Medtronic (MDT), Keysight Technologies (KEYS), Jacobs Solutions (J), Snowflake (SNOW), Palo Alto Networks (PANW), Intuit (INTU), and Deere (DE).  

Ex-dividend dates are coming this week for United Parcel (UPS), Chevron (CVX), Amgen (AMGN), Prudential Financial (PRU), Valero Energy (VLO), Marathon Petroleum (MPC), Amcor (AMCR), Microchip (MCHP), and other dividend-paying firms.

For additional exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.