Asset Management Weekly Market Commentary

Get market insights from our leadership

Profit taking hit U.S. stocks as market participants took chips off the table after a sizable post-election rally pushed many stocks into overbought territory. Large-caps outperformed small- and mid-cap (SMid) on the week and domestic indices fared better than markets tied to developed and developing countries abroad.
Even after pulling back on the week, the S&P 500 remains on firmer footing from a breadth perspective than country indices tied to developed markets abroad. With the U.K.’s FTSE 100, German DAX, CAC 40 in France, and Japan’s Nikkei 225 all seeing a significant narrowing of leadership in recent weeks, professional investors needing to play catch-up with benchmarks into year-end are likely to do so via U.S. large-cap stocks, likely leading to a widening of the performance gap between U.S. stocks and the rest of the world over the next six or so weeks.
The 10-year U.S. Treasury yield made another push higher on the week but again encountered resistance around the 4.50% level as buyers stepped in to take advantage of the back-up in rates. This was the 10-year yield’s 3rd attempt to break above the 4.50% level since May, reinforcing our view that this remains the key level worth watching for fixed income investors and a close above 4.50% could bring 4.75% into play in short order.

‘Magnificent 7’ member and $3.5T semiconductor behemoth Nvidia is set to report quarterly earnings after the market closes Wednesday. Nvidia’s guidance is likely to dictate the near-term direction for U.S. large cap stocks due to the stock’s sizable weighting within the S&P 500 as well as what it could portend for the broader artificial intelligence (AI) theme and related areas.
Initial jobless claims for the week ended November 16 and continuing claims for the week ended November 9 are released Thursday.
U.S. Purchasing Managers Index (PMI) for November is released Friday with the Services PMI expected to rise to 55.2 from 55.0 in October, while the Manufacturing PMI is expected to also rise to 48.8 from 48.5 the prior month. A reading above 50 is indicative of expansion or growth, while a reading below 50 indicates contraction.