11.11.24 Weekly Market Commentary
Week In Review
The upshot of both the U.S presidential election and the Federal Reserve interest rate decision was a monumental record-breaking performance for domestic equity markets. Not only did former President Donald Trump win the U.S presidential election, but the Republican Party regained the Senate majority and could gain control of the House of Representatives as well. The pro-business implications of a unified Congress political agenda that includes tax cuts and deregulation was the calculus for higher equity valuation levels. Beyond the diminished political uncertainty, the financial markets found additional support from a Federal Reserve policy meeting that culminated in a 25 basis point reduction in the benchmark federal funds rate. Fed Chairman Jerome Powell stated, “This further recalibration of our policy stance will help maintain the strength of the economy and the labor market and will continue to enable further progress on inflation as we move towards a more neutral stance.'' The easing move demonstrated confidence and countered rising bond yields, lessening the biggest headwind for equities. The 10-year U.S. Treasury yield sank 17 basis points to close at 4.30% and all major U.S. equity indices climbed higher. The S&P 500 hit 6,000 for the first time, up +4.7%.
This Week
Progress on inflation and the health of the consumer will be on full display. Refreshed data for the Consumer Price Index and U.S. retail sales will be the bookends for an economic outlook speech by Fed Chair Jay Powell. The Q3 earnings season resumes with 12 S&P 500 companies reporting.3
Portfolio Themes
The S&P 500 forward P/E ratio is now 22.2.4 This is due in large part to the performance and outsized earnings growth of the “Mag 7” stocks. However, analysts project double-digit earnings growth in 2025 for the other 493 companies in the index. 5 Simplicity offers a direct index of the equal-weighted S&P 500, improving diversification and risk management.
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Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts. Portfolio Themes chart sourced from J.P. Morgan Asset Management.
1 Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums.
2 Index Statistics: P/E TTM – Calculated by dividing an investment’s price by the trailing 12-month earnings per share value. Yield – Expected dividend-per-share divided by current share price. Table statistics are updated monthly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX). Past performance does not guarantee future results.
3 FactSet.
4 YCharts.
5 FactSet.
Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication.
