Stocks Up for 4th Week Amid Mixed Economic Signals

U.S. Stock Market Ends on High Note with Four-Week Rally

The U.S. stock market concluded its trading on Friday with a modest gain, marking a significant milestone of four straight weeks of increases. The majority of sectors within the S&P index wrapped up the day with gains, led robustly by the Health Care sector. However, the session wasn’t positive across the board; the Communication Services and Technology sectors lagged behind, finishing the day with losses.

Economic Data and Investor Outlook

The S&P Global Flash U.S. Composite PMI caught the attention of market watchers on Friday, revealing a decline in private sector employment for the first time since the middle of 2020. Despite this potential red flag, retail investor sentiment remained positive thanks to a strong market performance in November. JPMorgan’s Peng Cheng highlighted the significant influx of $4.8 billion into cash equities by retail investors over the previous week, an investment surge that was notably higher than the year-long average and the highest since April of last year.

Exchange-Traded Funds (ETFs) also saw an inflow of $2.7 billion. However, there was a notable lack of enthusiasm for broad-based equity ETFs, such as those that track the S&P, Nasdaq, and Russell indexes, indicating that investors might be leaning more towards individual stocks.

Spotlight on Nvidia’s Results and Fed’s Monetary Policy Strategy

Nvidia’s stock drew particular attention this week as its price experienced a drop during after-hours trading. This was surprising given the company’s announcement of excellent earnings and forward-looking projections that comfortably exceeded analyst estimates. The tech giant’s data center revenue reached unprecedented heights, but the potential impacts of the U.S. government’s export restrictions and sales prospects in China led to some reservations expressed by Nvidia’s CFO. This prompted a degree of caution about the company’s future outlook.

On the fiscal policy scene, Federal Reserve officials have reached a consensus on adopting a measured strategy regarding interest rate adjustments, with the intention to maintain a restrictive monetary environment for an extended period.

This approach is consistent with the enduring inflation rates, which continue to hover above the Fed’s ideal 2% goal. Federal Reserve policymakers have set the federal funds rate at its highest level in more than two decades, and market expectations suggest this pattern will hold steady through the current year, with potential rate reductions anticipated only in 2024.