To The Moon

US indices dropped for the second consecutive week as a result of the Fed’s latest interest hike to curb inflation, as well as retail sales, which declined significantly despite aggrieved promotions to incentive holiday shopping. Commodities also contractedas the ECB signaled that it was willing to be aggressive in its pursuit to reign in inflation, even at the cost of a severe economic contraction.

For the week, the Dow Jones fell 1.7%, the broader marketS&P 500 declined 2.1%, and the Nasdaq saw a sharp decline of 2.7%. The week ahead is packed with housing market data,consumer confidence, and $S&P 500(.SPX)$  $DJIA(.DJI)$  $NASDAQ(.IXIC)$ inflation updates, which should help drive markets ahead. 

For a full list of events in the upcoming week, please refer to the economic calendar.

Housing Market Updates

Investors will await a slew of housing market datain the week ahead, which will help define how real investors are faring amidst recession fears and record-high mortgage rates. On Monday, the National Association of Home Builders (NAHB) will provide updates on homebuilder sentiment.

The index fell to 33 in November from 38 in October and is expected to fall further in December to 30, which is close to the low registered at the height of the pandemic in April 2020.

NAHB Sentiment Index, Source:Investing.com

The National Association of Realtors (NAR) will release data for the existing home sales for November on Wednesday, which is forecasted to show a decline from October’s 4.43 million units to 4.2 million.

The NAR will release new home sales data on Friday, with sales expected to fall from632,000 units in Octoberto 608,000 in November as a result of rising mortgage rates and limited new housing supply.

Updates On The Economy

The week ahead is also packed with updates on inflation and consumer confidence, which will further solidify the data released last week. On Friday, the Personal Consumption Expenditure (PCE) Price Index is set to be reported for the month of November.

Consensus forecasts show that the index has inched up 0.2%, slightly slowing down from the 0.3% gain seen in the previous month. Annually, PCE data indicates a price gain of 5.5%, down from 6%, which will be a positive sign for the Federal Reserve, which is looking to bring inflation under control.

PCE Price Index Annual Change, Source:TradingEconomics

On Thursday, the US will also release its GDP figures for the third quarterof 2023, providing much-needed cues on how the economy is growing based on the recent interest rate hikes.

Advanced estimates pegged the economy growing at 2.9%, which is a sharp reversal from the two straight quarters of decline preceding it. A stronger-than-expected growth will give the Fed more flexibility to tweak its interest rate decisions in the future.

Technical Indicators

S&P 500 Chart, Source:TradingView

The S&P 500 Index is now down 16.58% for the year. The Fear and Greed Index is now at 42, which indicates that investors are bearish about stocks.

1-Week Relative Performance, Source:Finviz

The three best-performing industries for the past week were Energy, Utilities, and Healthcare, which delivered returns of 0.6%, -0.96%, and -1.25%.

Bottom Line

The week ahead is packed with crucial economic data, including key housing market updates and data about the economy, including Inflation and Third Quarter GDP results, which will drivestocks ahead.

In recent weeks, markets have continued to drop due tohigher inflationand a weakening economy. Key corporate earnings and housing market updates will clearly depict where indices could be headed next.

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