This Week in Review 11/27/2023

“I am grateful for what I am and have. My thanksgiving is perpetual.” – Henry David Thoreau

Good morning,

We hope everyone had a safe and pleasant Thanksgiving. The holiday shortened week saw trading volume was on the lighter side but it was another winning week for the major indices, which were supported by broad-based buying interest.

Every S&P 500 sector finished higher. The best-performing sectors were the health care (+2.2%), consumer staples (+1.4%), and communication services (+1.3%) sectors. The relative laggards were the energy (+0.3%), utilities (+0.6%), and information technology (+0.6%) sectors.

NVIDIA was a key story stock during last week. The AI chip giant reported its quarterly results after the close on Tuesday. They were blowout results yet again, but there was some chatter about investors being disappointed that the company lacked visibility into how the export curbs to China will ultimately impact its sales in coming quarters. On Thursday, Reuters reported that NVIDIA is going to be delaying its China AI chip.

In its defense, NVIDIA was ripe for a pullback on just about any news. It had rallied 25% from its October 26 low going into its report. One could also make a case, then, that its soft finish to the week might have been a case of selling on the news more than genuine disappointment about its sales visibility in China, especially since the company also said the affected sales from U.S. export curbs are being more than offset by growth in other regions.

Even though many traders feel like the market is overbought and in need of a pull back, FOMO (fear of missing out) seemed to be a stronger driver, along with the continued belief that the Fed is done raising rates.

That belief drowned out a view in the FOMC Minutes for the October 31-November 1 meeting that suggested the Fed would raise rates again if it felt that was necessary.

It wasn't anything the market hadn't heard already, so it was more of a headline talking point for the market than a market mover.

There were a batch of earnings results out of the retail space last week that moved plenty of individual stocks, including Dick's Sporting Goods, Nordstrom, Best Buy, Kohl's, Lowe's, Burlington Stores, and American Eagle Outfitters to name a few. Collectively, the results were digested in a mostly positive manner.

The economic data last week had some mixed tones… specifically, existing homes sales in October transpired at the slowest annual pace (3.79 million) since August 2010 while initial jobless claims for the week ending November 18 decreased by 24,000 to a surprisingly low 209,000.

For the week, the 2-yr Treasury note yield increased five basis points to 4.95% and the 10-yr note yield increased three basis points to 4.47%

This week, the earnings calendar will feature some high-profile earnings reporters, namely Zscaler, CrowdStrike, Hewlett Packard Enterprise, Intuit, NetApp, Workday, Dollar Tree, Foot Locker, Five Below, Okta, PVH, Salesforce, and Snowflake.

Market Snapshot:

• Oil Prices – Oil prices fell as traders speculated on whether OPEC+ would agree on future production cuts. West Texas Intermediate crude futures (WTI) slipped $1.09, or 1.41% to close at $76.01 a barrel. Brent crude dropped 36 cents, or .44%, to close at $81.06 a barrel.
• Gold – Gold prices were on track for their second consecutive weekly gain. Spot Gold was up about 0.4% to $1,999.88 per ounce and rose about 1% last week. U.S. gold futures gained 0.4% to $2,0001.20. Silver finished the week at $24.341.
• U.S. Dollar – The dollar dipped on Friday, as investors believe interest rates have peaked. The dollar index fell 0.4% and was at 103.38. The dollar index is roughly down 3% for the month. Euro/US$ exchange rate is now 1.094.
• U.S. Treasury Rates – Treasury yields were higher Friday after the holiday break. The yield on the 10-year Treasury note was more than 5 basis points higher at 4.47% after a two-month low.
• Asian shares were down in overnight trading.
• European markets are trading lower.
• Domestic markets are off slightly this morning.

This week will feature an important slate of economic data that includes October New Home Sales, November Consumer Confidence, the second estimate for Q3 GDP, October Personal Income and Spending, which will include the PCE (Personal Consumption Expenditures) Price Indexes, Initial Jobless Claims, and the November ISM Manufacturing Index.

Today is Cyber Monday and could lend some insight to consumer spending during the upcoming Holiday Shopping season.

Have a wonderful week!!

The opinions expressed herein are those of Michael Hilger and not necessarily those of Raymond James & Associates, Inc., and are subject to change without notice. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Investing involves risk and you may incur a profit or loss regardless of strategy selected.
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