Stocks Decline Amid Hawkish Fed Signals and Economic Data

Today’s market sees the S&P 500 and Nasdaq at weekly lows, driven down by hawkish Federal Reserve signals and mixed economic performance. The report highlights a significant decrease in stock prices across several sectors, impacting investor sentiment amid changing interest rate expectations.

Date: 16-11-2024

AI Rating: 5

The recent report indicates a downturn in major U.S. stock indices, with the S&P 500 notably down by 1.17%. This decline follows Fed Chair Powell's comments signaling hesitance in interest rate cuts, which increased the 10-year T-note yield to a 5-1/2 month high. Such macroeconomic factors could negatively adjust investor expectations, i.e., increased borrowing costs.

Another aspect affecting stock prices is the performance of vaccine and pharmaceutical companies, notably those led by Robert F. Kennedy Jr. This scrutiny has led to drops for companies like Moderna (down over 6%), Vertex Pharmaceuticals (down over 5%), and Amgen (down over 5%). The hesitance surrounding vaccine-related businesses could signify potential bearish sentiment among investors in these sectors.

The manufacturing outlook is mixed; while the Empire manufacturing survey indicates stronger performance than anticipated, the manufacturing production index fell by 0.5%, aligning with expectations. Overall, though retail sales rose by 0.4%, they slightly underperformed forecasts. While these data points do not greatly affect short-term stock prices, they do contribute to the overall economic narrative.

In terms of earnings, the analysis notices that 75% of S&P 500 companies exceeding estimates suggests moderate resilience; however, this is slightly below the 3-year average. With a reported average earnings increase of 8.4% y/y in Q3 (double preseason forecasts), this aspect provides some positive leverage against otherwise negative market sentiment. Investors may remain cautious, but positive earnings can counteract fears regarding interest rates and economic fluctuations.

Investors should also be aware of the declines in chipmaker stocks after weaker forecasts, particularly with Applied Materials down more than 8%, leading the entire sector downward. This preemptively signals a more cautious approach towards semiconductor investments.

Stocks: MRNA VRTX AMGN LLY NVAX BNTX AMAT PFE AAP DIS DPZ POOL AA