Inflation Halts US Market & Disney's Rally?
For week ending 8 Nov 2024, US stocks just had their best week of 2024.
All 3 major indexes pressed to record highs after Donald Trump won the 2024 presidential election. (see below)
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The S&P 500 index and the Dow Jones Industrial Average rose more than +4.5%.
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The Nasdaq Composite rose nearly 6%.
What’s Up This Week?
For the week beginning 11 Nov 2024, a fresh reading on (a) inflation and (b) retail sales, will lead the economic calendar.
In quarterly earnings season, listed companies $Home Depot(HD)$, $Cisco(CSCO)$, and Disney (DIS) will highlight another week of earnings reports.
Incidentally, Warren Buffett backed $Nu Holdings Ltd.(NU)$ [NuBank] will also be reporting its Q3 2024 earnings on Wed, 13 Nov 2024 after market closing.
Digibanks comparison - will NuBank earn more than SoFi?
Interest Cut.
In a widely anticipated move, the Fed cut interest rates by -0.25% on Thu, 7 Nov 2024.
At the 2pm post-announcement press conference, Fed Chair Jerome Powell declined to comment on the central bank's plans on future rate cuts.
He did however remark that:
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He does not think it’s a good time to be doing a lot of forward guidance.
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He also noted that Fed officials will need to “gauge” the economic data released between now and December, before deciding if the Fed will cut interest rates again for the last time in 2024.
Consumer Price Index - October.
The 1st data the Fed will consider ahead of its December FOMC meeting will be the Consumer Price Index (CPI), out on Wed, 13 Nov 2024.
Wall Street economists expect:
Headline inflation.
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Annual: inflation to rise 2.6%, a further +0.2% gain from September’s 2.4%. (see below)
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Monthly: prices are set to rise +0.2%, per economist projections, in line with September increase.
Core inflation.
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Annual: Excluding food & energy prices, inflation is forecast to rise +3.3% YoY, unchanged from September's increase.
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Monthly: core price are set to rise +0.3%, also in line with the September gain.
Wells Fargo, MD & Chief economist, Jay Bryson remarked that:
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October CPI report will likely support the notion that the last mile of inflation's journey back to 2% target will be the hardest,
US Retail Sales.
Final US monthly retail sales report before the start of the holiday shopping season is set for release on Fri, 15 Nov 2024.
Economists estimate October retail sales increased 0.3% over the prior month’s 0.4%. (see above)
US GDP - 2nd Estimate.
The control group of retail sales that excludes several volatile categories like gasoline and feeds directly into US gross domestic product (GDP) is also expected to have risen by +0.3%. for its 2nd estimates. (see above)
Entering the release, several trackers point to the 4th quarter being off to a solid start for economic growth.
The Atlanta Fed GDPNow tracker currently projects the US economy growing at 2.5%.
Corporate Earnings - Disney.
On Thu, 14 Nov 2024, $Walt Disney(DIS)$ is set to report its quarterly results before the bell.
The media giant looks set to continue to improve its streaming business amid further declines in linear television.
Investors will also be interested on results within the company's theme park business after the segment fell short in previous quarter’s revenue.
Streaming profitability should be a bright spot after the company reported its 1st quarter of profits for that business in August.
The segment should get a boost from recent price hikes along with the continued rollout of Disney's password-sharing crackdown across its various platforms.
Shares are up about +9% this year. (see above)
Post US Election.
In a roaring rally from 6 Nov 2024 onwards, much has been made about trades like financials that could benefit from President-elect Donald Trump's policy.
Big Tech also saw significant upside.
$The Magnificent Seven ETF(MAGS)$ hit a fresh record high on both Thursday & Friday. (see above)
3 of Magnificent Seven stocks (Tesla, Nvidia, & Amazon), outpaced the S&P 500 on the week, with Alphabet also coming close.
Tesla had a unique Trump-related catalyst, with investors banking on Mr CEO's big bet on the president-elect's campaign paying off.
Markets seemed to be pricing in the potential for less government regulation over Big Tech in a 2nd Trump term.
Is this a sign of what’s to come in the US market for the coming year ?
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Do you think US market will continue its rally for “yet” another week?
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Do you think Disney & NuBank will rally after their quarterly report cards are out ?
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