November 26th Market Overview

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Happy Tuesday everyone.

Markets are showing up green today despite President-elect Trump’s new tariff proposals, with all major indices up/positive.

Consumer confidence continues to strengthen, reaching its highest level since July 2023. I can't do the normal formatting because the Wi-Fi is atrocious while I'm on vacation this week. I apologize, but it is what it is.

Let’s dig in…

Executive Summary

• S&P 500 pushes toward record close as investors digest Trump’s tariff plans

• Consumer confidence rises to 111.7, driven by positive labor market outlook

• New home sales plummet 17% in October as mortgage rates climb

• $AMGN leads Dow decliners with worst performance since 2000

Market Overview (as of 1 pm because I’m on a vacation)

Key Market Drivers

1. Trump’s Tariff Agenda: Plans for 25% tariffs on Mexico/Canada imports and 10% on Chinese goods

2. Housing Market Weakness: October new home sales drop to 610,000 units, while median prices jump to $437,300

3. Consumer Sentiment: Confidence index rises to 111.7, with inflation expectations falling to lowest since March 2020

4. Fed Minutes: Officials signal gradual approach to rate cuts pending sustained inflation decline

Stock Spotlight

• $AMGN ▼ 11.4%: Weight loss drug data disappoints, showing 20% reduction versus hoped-for 25%

• $KSS ▼ 18%: Cuts sales outlook, announces CEO departure in January

• $BBY ▼ 7.4%: Misses Q3 expectations, reduces full-year guidance

• $DKS ▲ 5%: Tops earnings forecasts, raises full-year outlook

• $ANF ▼ 4%: Slides despite earnings beat and strong holiday guidance

Big Name Updates

• $LLY & $NVO: Shares advance on potential Medicare coverage expansion for obesity drugs

• $MS & $GS: HSBC downgrades both to hold, citing limited upside after strong 2024 performance

• $RCL: Bernstein initiates coverage with outperform rating, $290 target, highlighting operational improvements

Other Notable Company News

• $CELG leads materials sector decline, dropping over 4%

• $DVN & $FANG pace energy sector weakness, each falling more than 2%

• $GM & $F decline over 2% and 8% respectively on tariff concerns

Sector Watch

Bond Market

Treasury yields advance amid tariff discussions and fresh economic data.

The 10-year yield rises to 4.31%, while the 2-year yield moves to 4.28%, reversing Monday’s yield curve inversion.

Bond traders are factoring in a 59.9% probability of a December rate cut, up from 52.3% on Monday.

Policy Watch

• Federal Reserve signals careful approach to rate cuts, emphasizing data dependency

• Learn about the most up-to date AI tools and whats breaking in the AI sector

• Biden administration proposes Medicare coverage for anti-obesity medications

• Mexican President signals potential retaliatory measures against proposed tariffs

What to Watch

1. PCE Data Release Tomorrow:

• Fed’s preferred inflation gauge release at 10:00 AM ET

• Could influence December rate cut probabilities

• Last major economic report before Thanksgiving

2. November Nonfarm Payrolls (December 6):

• First significant employment report post-election

• Key indicator for Fed’s December meeting

• Market sensitivity to labor market strength

3. Retail Performance:

• Holiday shopping season kickoff

• $BBY and $KSS guidance suggesting cautious outlook

• Consumer confidence impact on spending patterns

Thanks for reading 🙂

- John

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