November 10, 2024
Volume 11, Issue 45
Weekly Recap
On Tuesday, former President Donald Trump completed a remarkable political comeback and will be inaugurated president once again in January. On Wednesday, the stock market soared 2.5 percent to reach a new all-time high, its 49th of 2024. It was Wall Street’s best post-election day on record. The small-cap Russell 2000 rallied 5.84 percent. Most of the major benchmarks rose to record highs last week, as traders bet that the Republicans’ capture of the White House and Senate, along with their expected retention of the House of Representatives would result in faster earnings growth, looser regulations, and lower corporate taxes. The small-cap Russell 2000 led the gains, surging 8.57 percent for the week, but was the sole benchmark to remain out of record territory, ending the week 2.41 percent away from its November 2021 record high. Meanwhile, the S&P 500’s 4.66 percent gain for the week was its best in almost exactly a year (the week ended November 3, 2023).
The consensus of election consequences is that Donald Trump’s plans to restrict immigration and increase tariffs carry inflationary implications, but how (and how quickly) those measures are implemented are highly uncertain and will determine the final effect on the economy. In terms of growth, a strengthening U.S. dollar might offset some of the impact of tariffs on inflation, while lower taxes and some of the deregulatory initiatives that a Trump administration is likely to pursue should also support the economy.
Tuesday’s election overshadowed much of the rest of the week’s economic and policy developments. Following its scheduled policy meeting concluding Thursday, the Federal Reserve announced a 25-basis-point (0.25 percentage points) cut in the federal funds rate, its first easing move since cutting rates by 50 basis points in mid-September. Traders noted that there had been some speculation as to whether Fed Chair Jerome Powell would mention the future president’s fiscal policy and its potential impact on monetary policy, but Powell was resolute in stating that any changes would be evaluated as they were announced and that, “We don’t guess, we don’t speculate, and we don’t assume.” When questioned, Powell also stated that he would not resign if asked to do so by the president and that the president had no legal authority to remove him.
In terms of economic data, last week’s biggest surprise came in Tuesday’s release of the Institute for Supply Management’s gauge of October services sector activity, which came in at 56.0, well above expectations and the best reading since August 2022. (Readings above 50.0 indicate expansion.) Encouragingly, price pressures eased somewhat even as activity picked up, reversing a string of three monthly gains. According to the Institute’s chief researcher, surveyed companies reported only a minimal impact from recent severe weather, which seemed to have a larger impact on manufacturing firms.
U.S. Treasuries generated positive returns heading into Friday, as yields largely ended lower than where they ended the previous week. Intermediate- and long-term yields ended slightly lower while some short-term yields increased slightly. Election results sent yields upward on Wednesday, though the expected rate cut from the Federal Reserve helped bring them back down by Thursday evening.
Market Monitor
A full listing of market performance data is available here.
DQYDJ.com (“Don’t Quit Your Day Job”) offers helpful investment calculators here, including one that shows total returns for individual stocks. Koyfin.com provides reams of data on individual stocks, including the ability to track total return — and just about anything else — over time.
In the News
On Thursday, the Federal Reserve cut interest rates by a quarter of a point, its second rate cut this year. In a statement, Fed officials noted that inflation “has made progress toward the Committee’s 2 percent objective but remains somewhat elevated,” justifying the more cautious cut after the 50-basis-point cut in September. Fed Chair Jerome Powell also said Thursday that he would not resign if President-elect Trump asked him to step down, adding that he doesn’t believe it’s “permitted under the law” for a president to fire the Fed chair.
Take the Federal Reserve’s projections from September and throw them into the trash. The path forward for rates is now highly uncertain.
The ISM® Services index was at 56.0 percent, up from 54.9 percent last month. The employment index increased to 53.0 percent, from 48.1 percent. Note: Above 50 indicates expansion, below 50 in contraction.
In the week ending November 2, the advance figure for seasonally adjusted initial jobless claims was 221,000, an increase of 3,000 from the previous week’s revised level. The previous week’s level was revised up by 2,000 from 216,000 to 218,000. The 4-week moving average was 227,250, a decrease of 9,750 from the previous week’s revised average. The previous week’s average was revised up by 500 from 236,500 to 237,000.
A big week for small stocks.
Wall Street is very excited post-election.
Former and future President Trump’s victory signals major policy shifts ahead. The Trump trade; the Trump economy.
October hiring and unemployment shown in charts.
The risks of buffer ETFs.
A bunch of monkeys escaped from an Alpha Genesis research facility in South Carolina last week. Never fear, however, because “Alpha Genesis currently have eyes on the primates and are working to entice them with food,” according to police.
Charts of the Week
I found the following articles to be of note. Some may be of interest only to advisors while others are aimed more broadly. You may hit paywalls below; many can be overcome here.
What Trump’s Win Means for the Markets: 3 VIP Views (Dinah Wisenberg Brin)
IRS Sets 401(k), IRA Contribution Limits for 2025 (Melanie Waddell)
How Seniors Can Do Smart Roth IRA Conversions (Laura Saunders)
This is the best thing I read recently. The smartest. The most powerful. Foreign affairs. RIP, Murray McCory. Private markets are going retail. Buffett’s cash.
Before last week, over the last 10 presidential elections, Republicans and Democrats each won five times. In 9 of these 10, the stock market was higher one year later for an average gain of 18.7 percent. The exception was 2001, the year of 9.11.
In 1930, Babe Ruth became the first American athlete to rake in a higher salary than the president of the United States (then $80,000 versus $75,000). The Great Bambino was famously asked if he felt he should make more money than the president, to which he replied, “Why not? I had a better year than he did.”
Securities and advisory services are offered through Madison Avenue Securities, LLC, a member of FINRA and SIPC, a registered investment advisor. This report provides general information only and is based upon current public information we consider reliable. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment or any options, futures, or derivatives related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities, other investment, or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that price or value of such securities and investments may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Diversification does not guaranty against loss in declining markets. Madison Avenue Securities, LLC | 13500 Evening Creek Drive N, Suite 555 | San Diego, CA 92128 US
