Asset Management Weekly Market Commentary

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Last week’s equity rally was broad-based with every S&P 500 sector closing out the week with gains, while the equally weighted S&P 500 outperformed the market capitalization weighted S&P 500 last week. We continue to expect mega-cap growth to outperform as performance chasing takes hold and market leadership could narrow into year-end.
Better market breadth is an encouraging sign of improved investor risk appetite, but with small-cap stocks jumping 5% on the week, a week or two of sideways to modestly down price action would likely be healthy and provide firmer footing for small caps into 2024.
Downward pressure on U.S. Treasury yields provided a tailwind for stocks and bonds last week as ‘bad’ economic news was viewed as good news for paper assets of all sizes and quality. However, additional downside for Treasury yields could signal that economic growth expectations are faltering and could boost bonds at the expense of stocks.

Durable goods orders for October are released Wednesday and are expected to have fallen 3.7% month over month during the month, a significant deceleration from 4.6% month over month growth in September. This release is worth monitoring as a gauge on the health and willingness of the U.S. consumer to spend as we enter the holiday shopping season.
Minutes from the Federal Open Market Committee’s two-day meeting that concluded on November 1 will be released on Wednesday. While the FOMC didn’t hike rates earlier this month, comments made by Chair Jerome Powell in recent weeks have skewed toward a more hawkish approach to monetary policy than his post-meeting press conference led market participants to expect. Meeting minutes will be parsed to see if the market’s initial dovish take was incorrect or if something has changed in the economic data since to alter Chair Powell’s more hawkish stance.