Economy
A recent report out from the National Association of Realtors showed home sales rose in the month of October, both on a monthly basis compared to last October. The report was released Thursday, the same day the 30-year mortgage rate hit a 4-month high of 6.84%. If those two facts sound like they couldn't happen together, or at least shouldn't, that because home purchases that closed in October were likely under contract in August or September when rates were back near 6%. Since mid-September, rates have surged higher despite the Fed having cut rates by 0.75% over that same time.
With respect to the labor market, weekly jobless claims fell to a 7-month low of 213,000 (we had 209,000 on April 27 earlier this year). A still-strong labor market paired with continued cooling inflation could have Jerome Powell and the Fed on a
collision course with the incoming Trump administration if inflation were to reaccelerate, which could happen for a number of reasons, namely a hot economy and/or tariffs. The FOMC will meet once more before we close the books on 2024, and at this point the futures markets have it as a toss up whether or not we see another rate cut this year. Before the decision is made, we'll have another monthly jobs report and more inflation data would could sway the Fed either way.
Markets
The S&P was up 1.68% this week, recovering most of the losses from last week's postelection breather. We're less than 1% away from the high water mark, with the index already up 25% for the year. The highlight of the week came Wednesday when chipmaker Nvidia announced they had beat both their revenue and earnings estimates for the quarter. We don't often write about crypto investments, but we'd be remiss to not mention Bitcoin nearing the $100,000 mark this week as well. With Q3 earnings season effectively in the rearview mirror, the market will turn its attention to a few key economic reports due out over the next few weeks, followed by the Fed's December 18 meeting. With respect to the next earnings season, expectations are relatively high right now. John Butters at FactSet reports that earnings grew 5.8% for Q3 and are expected to grow by 12% for Q4, which would be the highest growth rate in 3 years for a quarter.
What We're Reading
Have a great weekend.
Dogwood Wealth Management
