Stocks slide, rates jump after Fed decision and comments
The stock market logged sharp declines. The week started in better form, but equities hit a wall Wednesday after the Fed implied with its words and guidance that further rate cuts can wait until there is more progress on inflation. Wednesday's session left the S&P 500 178 points lower, the Nasdaq Composite was 3.5% lower, and the Dow Jones Industrial Average closed more than 1,100 points lower, logging its tenth consecutive decline.
This followed the FOMC's decision to cut rates 25 basis points to 4.25-4.50%, as expected. It was not a unanimous vote. Cleveland Fed President Hammack dissented in favor of leaving the target range for the fed funds rate unchanged at 4.50-4.75%.
The Summary of Economic Projections showed that the median estimate for PCE inflation and core PCE inflation was increased for 2024 and 2025, and the estimate for unemployment was decreased for 2024 and 2025.
Additionally, the median estimate for the 2025 fed funds rate was bumped up to 3.9% from 3.4%, signaling an outlook for only 50-basis points of easing in 2025 versus 100-basis points when the September projection was released.
Rising market rates put added pressure on stocks. The 10-yr yield jumped 12 basis points to 4.52% and the 2-yr yield settled seven basis points higher.
Small and mid cap stocks underperformed their larger peers, leading the Russell 2000 to sink 4.5% since last Friday and the S&P Mid Cap 400 to close 4.7% lower than last week. The S&P 500 declined 2.0%, the Nasdaq Composite fell 1.8%, and the Dow Jones Industrial Average logged a 2.3% loss.
Mega cap stocks held up better than the "rest" of the market, but still garnered selling interest. The equal-weighted S&P 500 fell 3.0% and the Vanguard Mega Cap Growth ETF (MGK) registered a 1.4% loss.
The S&P 500 energy sector struggled more than other sector, falling 5.6%. The rate-sensitive real estate sector was the next worst performer, dropping 5.0%. The only sector that settled less than 1.0% lower was information technology, which declined 0.7%.
The market staged a rebound on Friday following the Personal Income and Spending Report for November, which didn't show any improvement in inflation, but importantly, the data was better than some had feared. The PCE Price Index rose to 2.4% on a year-over-year basis versus 2.3% in October, and core PCE was 2.8%, which was unchanged from October. Consensus estimates however, pegged them coming in at 2.5% and 2.9%, respectively.
Nasdaq Composite: -1.8% for the week / +30.4% YTD
S&P 500: -2.0% for the week / +24.3% YTD
Dow Jones Industrial Average: -2.3% for the week / +13.7% YTD
S&P Midcap 400: -4.7% for the week / +12.3% YTD
Russell 2000: -4.5% for the week / +10.6% YTD
Copyright © 2024 Briefing.com.
Quantum Private Wealth LLC. is an investment adviser located in Tampa, Florida. Quantum Private Wealth LLC. is registered with the Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Quantum Private Wealth LLC. only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Quantum Private Wealth's current written disclosure brochure filed with the SEC which discusses among other things, our business practices, services, and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov.
Please note, the information provided in this document is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. Please refer to the disclosure and offering documents for further information concerning specific products or services.
Comentarios