The Week in Charts
Market Recap
The U.S. stock market experienced a significant rally this week, primarily fueled by Donald Trump’s presidential victory. Investors responded positively to the prospect of policies aimed at stimulating economic growth, including potential tax cuts and deregulation.
Additionally, the Federal Reserve lowered the federal funds rate by 25 basis points, bringing it to a range of 4.5% to 4.75%, further contributing to the positive market sentiment.
Source: JP Morgan
Economic indicators further bolstered investor confidence, with favorable reports on jobless claims, manufacturing activity, and consumer sentiment.
These factors collectively led to strong performance in U.S. equities for both the week and the year-to-date in 2024.
Productivity Growth in Third Quarter
The U.S. Bureau of Labor Statistics reported a 2.2% increase in nonfarm business sector labor productivity for the third quarter of 2024. This growth was attributed to a 3.5% rise in output and a 1.2% increase in hours worked. Compared to the same quarter last year, productivity showed a 2.0% improvement.
Unit labor costs in the nonfarm business sector rose by 1.9% in the third quarter, reflecting a 4.2% increase in hourly compensation alongside the 2.2% productivity gain. Over the past four quarters, unit labor costs have increased by 3.4%.
Services Sector Expansion Continues
Source: ISM
The Services ISM Report On Business indicated that economic activity in the services sector expanded for the fourth consecutive month in October. The Services PMI® registered 56 percent, marking the highest reading since July 2022 and signaling sector expansion for the 50th time in 53 months.
This combination of political change, monetary policy adjustment, and positive economic indicators has created a favorable environment for U.S. equities, driving the market’s strong performance in recent weeks.
What’s Going On In Your Portfolio?
We have been taking profits in some technology names and looking to reposition the portfolio to favor areas of the economy that will do well under a presidency that favors less regulation.
Volatility stops remain in place in case any unforeseen events occur.
Bond portfolios remain fully invested in High-Yield bonds. The BofA Merrill Lynch High Yield Index continues to rise – which has historically been a good sign for the stock market.
Upcoming Economic Data to Keep an Eye On
Source: Trading Economics
