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The equity markets provided mixed results last week with the NASDAQ 100 Index the leader at +2.3% and the S&P 500 Index +0.4%. Several other indices saw negative returns last week with the Dow Jones Industrial Average -1.3%, the Russell 2000 small cap -2.8%, and international markets –1.5%. The U.S. 10-year Treasury bond yield decreased to 1.548% at Friday’s close versus 1.570% the previous week.
Current forecast for the S&P 500 Index is for earnings to be +42.3% year-over-year versus an expectation of +41.5% last week. At the outset of the earnings season in early October, the Third Quarter year-over-year growth was expected to be 29.4%. This week 12 companies in the S&P 500 are scheduled to report earnings. Of the 474 companies in the S&P 500 that have already reported earnings, 80.8% have reported earnings above consensus estimates. This compares to a long-term average of 65.8% and prior four quarter average of 84.7%.
Much of the economic data is front-loaded this week due to the Thanksgiving holiday. Two key items this week are the Personal Consumption Expenditures (PCE) Price Index for October and the minutes of the recent Federal Reserve meeting. The PCE Price Index is the Fed’s preferred gauge of inflation.
In our Dissecting Headlines section, we look at the forecast for travel over the Thanksgiving holiday and cost of the holiday meal.
Financial Market Update
Dissecting Headlines: Thanksgiving
The American Automobile Association (AAA) predicts 53.4 million people will travel over the Thanksgiving holiday. This is 13% higher year-over-year and within 5% of the pre-COVID 2019 level of 56 million. Air travel is expected to increase 80% year-over-year and automobile travel is expected to increase 8%. The travel increase comes during a time of higher fuel prices. The average price of gasoline in the U.S. is $3.40 per gallon, which is 61% higher year-over-year and 31% higher from Thanksgiving 2019.
For those doing the cooking, the American Farm Bureau Federation estimates dinner for a family of 10 will average $53.31, which is 13.7% higher year-over-year. The $46.90 price for 2020’s Thanksgiving dinner was down 4% from 2019 and the lowest in ten years, so this year’s increase appears especially steep. The price of Turkey is 24% higher year-over-year. Outside of the main course, the remainder of the meal is higher by approximately 6.6%.
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