Cooling inflation reports combined with a cooling job market data from earlier in the month has sustained the recent equity rally. The weekly return for the S&P 500 Index was +2.3%, the Dow was +2.1%, and the NASDAQ was +2.0%. All eleven sectors in the S&P 500 Index were positive for the week led by the Real Estate, Materials, and Consumer Discretionary sectors. The 10-year U.S. Treasury note yield decreased to 4.441% at Friday’s close versus 4.628% the previous week.
The October Consumer Price Index (CPI) showed retail inflation flat month-to-month and +3.2% year-over-year. Core CPI, which excludes food and energy prices, was +0.2% month-to-month and +4.0% year-over-year. The October Producer Price Index (PPI) showed wholesale inflation 0.5% lower month-to-month and +1.3% year-over-year. Core PPI was +0.1% month-to-month and +2.9% year-over-year. While still not down to the Federal Reserve’s 2% inflation target, these reports demonstrate a cooling pace of inflation and raised confidence among investors the Federal Reserve could be done with the current monetary tightening cycle. Expectations for the Federal Open Market Committee to hold rates steady at the December meeting are currently 99.8%.
On fiscal policy, the House of Representatives, Senate, and President Biden all approved the stopgap funding bill to keep the government running. This continuing resolution funds part of the government until January 19th and the remainder through February 2nd. The current bill does not have any significant spending cuts over the interim period. House Speaker Mike Johnson has pledged to address spending cuts in January.
The third quarter earnings reporting period is almost complete. To date, 469 companies in the S&P 500 Index have reported earnings and another 11 companies are scheduled to report this week. S&P 500 Index earnings are expected to grow by 6.6% year-over-year on revenue growth of 1.4%. This is an increase from the 1.6% earnings and 0.8% revenue growth forecasted at the start of the earnings reporting period. For full-year 2023, S&P 500 Index earnings are expected to grow by 2.4% on revenue growth of 2.0%.
In our Dissecting Headlines section, we look at the cost of a Thanksgiving dinner.
Financial Market Update
Dissecting Headlines: Thanksgiving Dinner
Based on data from the Farm Bureau, the cost of this year’s Thanksgiving dinner for 10 is $61.17, down 4.5% compared to last year. The cost is still 14.7% higher than 2021 and 25% higher than 2019’s pre-pandemic level.
Turkey, the meal’s largest component, has an average price of $27.35 for a 16-pound turkey, or $1.71 per pound. This is 5.6% lower year-over-year. Turkey prices have fallen due to a drop in cases of avian influenza.
Among other meal components, stuffing mix is down 2.8% year-over-year, pie crusts are down 4.9%, whipping cream is down 22.8%, and fresh cranberries are down 18.3%. These declines are partially offset by increases in pumpkin pie mix which is up 3.7% year-over-year, dinner rolls up 2.9%, sweet potatoes up 0.3%, and mixed vegetables up 2.3%.
Last week, we showed American Automobile Association data forecasting 55.4 million Americans would be traveling greater than 50 miles from home over the holiday weekend. We wish everyone a safe and happy Thanksgiving holiday.
Want a printable version of this report? Click here: NovaPoint Weekly November 20, 2023
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