Key Takeaways
- Markets React To Fed Minutes And Key Economic Reports Today
- Light Volume Expected Ahead Of Holiday With Economic Data Driving Sentiment
- Political And Trade Concerns Loom As Transition To New Administration Nears
It was a mixed day for stocks on Tuesday. The S&P 500 and Nasdaq Composite both jumped 0.6%, while the Dow Jones Industrial Average gained 0.3%. However, the Russell 2000 fell by 0.7%. With the holiday shortened week, volume was relatively light. But today could prove to be interesting with some notable earnings and a number of economic reports being released.
The big news on Tuesday was the release of minutes from the latest Federal Reserve Open Market Committee (FOMC) meeting. Those minutes, which normally come out on a Wednesday, were bumped up by a day because of the short trading week and were largely consistent with what we have heard from members of the Fed recently. While FOMC members were unanimous in their decision to cut rates by a quarter point last month, they were less certain about rates moving forward. What the Fed decides to do next could be largely impacted by today’s economic reports.
Among today’s reports is the most recent Personal Consumption Expenditures (PCE) report. Analysts are looking for Core PCE prices to be up 0.3% on a month-over-month basis and up 2.8% year-over-year. The actual numbers are due out at 9am CT. The most recent Durable Goods report showed month-over-month orders up 0.2% versus forecasts of being down 0.8%. Later today, in addition to PCE, the Chicago Purchasing Managers Index (PMI) is due out and that number is forecast to come in at 44.9, up from 41.6 last month. A reading below 50 can be indicative of the manufacturing sector being in a recession.
Some individual stocks in the news today include Autodesk, Dell and Hewlett Packard Enterprise. Autodesk reported earnings and revenues that beat analyst expectations and also issued an upbeat forecast ahead of estimates. Still, the stock is down nearly 8% in premarket. In the case of Dell, the company beat on earnings but missed on revenues and issued a downbeat outlook on weak demand for PC sales. Shares of Dell are up 84% this year through Tuesday but are lower by 12% in premarket. We also heard from Hewlett Packard. Like Dell, HP beat on earnings, missed on revenues and also missed on forward guidance. That stock is down 8% premarket.
As I’ve been saying, I believe markets are turning their attention toward political and economic policy as the new administration gets set to take office. President-elect Trump has already said he intends to use tariffs on day one of his inauguration and that has trading partners on edge. Both Mexico and Canada have said they will issue retaliatory tariffs, suggesting a possible trade war could be just a couple months away. This is something I’m monitoring as it could affect inflation and interest rates.
For today, I expect volume to be pretty light with the bulk coming near the open. The PCE report, which normally comes out before the market open, will be released about thirty minutes into the trading session and that could determine direction for the day. Despite my expectations of low volume both today and during Friday’s abbreviated session, there is still a lot of noise out there that could move prices around a bit. We’re all becoming reacclimated with President-elect Trump’s unexpected announcements that can cause markets to move. Israel and Hezbollah appear to have reached a cease-fire, which should be great news, but we’ll see if it holds. Also, while it is a holiday here in the U.S., it’s not a global holiday, and that can mean other market-moving news is possible. As always, I would stick with your investing plan and long-term objectives.
Finally, I just want to take a moment and wish everyone a very Happy Thanksgiving. Whether you’re in Beverly Shores, Indiana or Beverly Hills, California, while our politics may vary across the country, leave that at the door, this is a time of year to be thankful for friends, family and loved ones. I hope you can enjoy the time together and please travel safely.
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