S&P 500 Falls as Fed's Hawkish Stance Pressures Stocks

In a recent report, stock indexes including the S&P 500 and tech-heavy Nasdaq saw declines, driven by hawkish statements from the Federal Reserve. Economic indicators showed stronger retail sales and manufacturing data, but concerns over interest rates persist.

Date: 17-11-2024

AI Rating: 5

The report outlines a significant bearish trend in the stock market, with the S&P 500 Index closing down -1.32%, the Dow down -0.70%, and the Nasdaq 100 down -2.40%. Factors that contributed to this decline include implications of a hawkish Federal Reserve and rising bond yields.

A notable economic detail is that October retail sales rose +0.4% m/m, which exceeded the expectation of +0.3%. This stronger-than-expected performance may lead the Fed to maintain higher interest rates instead of a potential cut. Additionally, the November Empire manufacturing survey showed a robust increase to 31.2, indicating strong growth in business conditions, which poses another hawkish signal for monetary policy.

In terms of corporate performance, the report states that 75% of S&P 500 companies that reported earnings exceeded estimates, with an average year-on-year increase of +8.4% in quarterly earnings for Q3, more than double the preseason forecast. While this is a generally positive news point, it was slightly below the three-year average, indicating possible caution as expectations shape future trading.

The analysis mentions that Applied Materials' weaker-than-expected Q1 net sales forecast led to a significant drop over -9%, thus affecting chip stocks negatively. Also, several vaccine manufacturers and pharmaceutical stocks have sold off, reflecting the market's response to political appointments, such as the appointment of Robert F. Kennedy Jr. in the health sector.

Overall, while there are signals of strong economic performance leading to increased expectations of hawkish Fed policies, the inconsistent performance among sectors and individual companies results in a negative sentiment for the stock indices.

Stocks: AMAT MRNA LLY AMGN BMY REGN VRTX BNTX PFE AAP DIS AA CNP AEP VST EXC D LNT SMCI SNAP DOW NVDA AVGO PLTR HALO