by Mariann Montagne, CFA
All data is for the week ended November 17, 2023
Stocks
Stocks were broadly higher last week, with mid- and small-cap stocks again outperforming large caps. The benchmark S&P 500 rose 2.31% while the Russell 2000 gained 5.49% and the Nasdaq added 2.42%. Overseas the developed markets index (MSCI EAFE) rose 4.51% while the emerging markets index (MSCI EEM) gained 2.99%. Within the U.S. the best performing sectors were real estate and materials while consumer staples and energy were the laggards.1
Fixed Income
Interest rates fell and bond values rose last week in response to lower-than-expected inflation data. See Economic Data below. The benchmark 10-year treasury yield dropped 17 basis points to 4.44%.2 The negative spread between 2-year and 10-year treasury yields has dropped to 44 basis points from 107 basis points on March 8.3
Commodities
The price of oil has been declining for four consecutive weeks, with the price of West Texas crude falling 1.46% last week to $76.04 per barrel.4 The U.S. Energy Information Administration has been lowering its forecasts for next year’s oil demand and now expects a 100,000 barrel-per-day surplus in 2024.5
Economic Data
The leading indicator for consumer price inflation—the producer price index—fell 0.5% last month, swinging from the increase of 0.4% in September. This brought the year-over-year increase down to 1.3% in October versus expectations of 1.9%. After excluding volatile food and energy prices, core producer prices were flat on a month-over-month basis, also below forecasts.6
The consumer price index (CPI) was flat in October versus September primarily due to a drop in the price of energy. The CPI rose 3.2% on a year-over-year basis last month, slightly below the consensus expectation and a half point below September’s rate. After excluding volatile food and energy, core CPI rose 0.2% on a month-over-month basis and declined a tick to 4.0% on a year-over-year basis.7
While total retail sales slipped 0.1% in October, they were better than the consensus estimate of a 0.3% drop. This compares to a 0.9% gain the previous month. Core retail and food services sales (excluding the more volatile categories of motor vehicles and parts and gasoline) rose 0.1% but continued to slow in October. The largest declines were for furniture and home furnishings along with miscellaneous retailers.8
Company News9
Financial stock holdings in Gradient strategies performed well last week due to the widespread decline in interest rates. Bank of America Corp. (BAC) and Morgan Stanley (MS), owned in both the Core Select and G50, rose 7.55% and 5.66%, respectively.
Target Corp. (TGT), a Contrarian Choice and Core Select holding, reported quarterly results that significantly beat low expectations. Same store sales declined 4.9%, in line with their plan. Gains in profitability were attributable to tight inventory controls, higher percentage of sales in-store and strong sales in beauty products. Management also raised guidance for the coming quarter.10 Shares rose 21.14% last week.
Wal-Mart Inc. (WMT), a Core Select holding, reported sales and earnings that were better than expectations, including same store sales growth of 4.9%. However, managementnoted softness going into the important holiday selling season.11 Shares declined 6.52% for the week.
Did you know…
Those gentle, slow moving sloths store blood in their pancreas in case of emergency. If they feel threatened or cornered, the blood is released into the sloth’s system, creating a burst of energy that will allow them to run up to 35 miles per hour.
Mariann Montagne, CFA
Portfolio Management Consultant
Sources:
1 JP Morgan Weekly Market Recap 11-20-23
3 Federal Reserve Bank of St. Louis
5 Energy Information Administration 11-7-23
6 Bureau of Labor Statistics 11-15-23
7 Bureau of Labor Statistics 11-14-23
8 Bureau of the Census 11-15-23
9 All weekly changes in company stock prices: Yahoo Finance