Market Minute

Weekly analysis from the FS Investments Research team
Listen to the podcast. Read the report. Start your week up to date.

November 25, 2024

Download the report

Listen to the latest Market minute report

Equities

U.S. equities made steady gains throughout the week despite some volatility. The Russell 2000 surged to a 4.46% gain, while the S&P 500 returned a more modest 1.68% as some members of the Mag 7 acted as drags on returns. Alphabet was the largest laggard as the company was the subject of a DoJ antitrust suit focused on its Chrome browser. In the biggest event of the week, Nvidia’s earnings announcement was initially met with mild disappointment, but the stock ended flat. Tesla continued its post-election surge, now up 40% since Nov 5. Foreign equities lagged again as the U.S. dollar strengthened to a two-year high.

Fixed income

Fed expectations continue to shift rapidly, both for this year’s final FOMC meeting on December 18 and for 2025. Markets are now evenly split on whether the Fed will cut rates –25bps in December and now expect only two 25 bps cuts in 2025. This wild swing in policy expectations has catalyzed a steady uptrend in the 2-year Treasury yield, which ended the week at 4.37%, up 85 bps from its low in late September. The 10-year Treasury yield traded sideways in a 13 bps range that ended close to flat. Broader fixed income performance benefitted at the margin and high yield bonds outperformed with a 0.28% gain as spreads tightened.

Commodities

Crude oil prices rose back above $70/bbl on escalations in the Russia-Ukraine war and growing belief OPEC+ will yet again delay plans to reintroduce supply. The IEA still expects a global oversupply of around 1 mmbpd next year, which has put a ceiling on prices. Geopolitical tensions and the reflationary Trump trade also drove a 5.53% rebound in gold prices, its best week in over a year. Meanwhile, Bitcoin surged to near $100,000 as investors anticipate a much friendlier crypto regulatory regime.

Economic overview

Initial jobless claims fell to 213,000, a 6-month low, while continuing claims jumped to 1.9 million, a 3-year high. This highlights the two-speed nature of the employment picture: few layoffs but sluggish hiring. Housing data was mixed, as existing home sales posted a 3.4% m/m increase to 3.96 million units in October, but housing starts disappointed with a –3.1% m/m decline to 1.311 million units and building permits fell a tad.