The first full week of November was a relatively quiet one with only a couple of major news releases on the calendar. However, it was not without intrigue as some members of the Fed said that interest rates could continue to rise if inflation remained a problem that couldn’t be solved by other means.
On Wednesday morning, Jerome Powell said that the Fed needed to be flexible in its approach and rely on common sense as much as it relies on data. He cautioned that the economy is dynamic and that economic shocks can happen without warning that may make it necessary to raise or lower rates accordingly.
During another speech on Thursday afternoon, he said that the Fed was not ready to say that the United States had reached its peak interest rate. The Fed Funds rate is currently in a range between 5.25 percent and 5.5 percent, which is the highest it has been in more than two decades.
Powell then seemed to hedge his bets by also mentioning that improvements in the supply side could help to tame wage and price increases. Most are still in agreement that interest rates will remain where they are for quite some time, which could mean most or all of 2024. Last month, it was revealed that the inflation rate in the United States was 3.7 percent, which is still significantly higher than the 2 percent target rate. However, it is significantly lower than the 9.1 percent in July of 2022.
On Thursday, unemployment claim data was released and revealed that 220,000 people had filed for benefits, which was up from 218,000 a week ago. On Friday, the University of Michigan released its preliminary consumer sentiment and inflation expectation figures. Consumer sentiment was at 60.4 percent, which was down from 63.8 percent a month ago. Analysts had expected the preliminary number to be 63.7 percent. In addition, consumers expect that the inflation rate will be 4.4 percent a year from now, which is up from 4.2 percent a month ago.
The Dow would finish the week up 183 points to finish at 34,283. It would spend the majority of the week in the red before a strong Friday saw the market gain 391 points to allow it to finish in positive territory. The market made a weekly low of 33,873 on Thursday before reversing and closing at a peak of the week.
The Nasdaq also finished the week higher thanks to a strong performance on Friday. For the week, the Nasdaq was up 2 percent to close at 13,798, and almost all of that was thanks to a 276-point gain on the closing day of the week. On Monday, the Nasdaq made its low for the week at 13,490 before reversing and staying in a trading range until Friday.
Finally, the S&P 500 was up 1.15 percent this week to close at 4,415. As with the other two major indices, the S&P 500 finished in the green thanks to a strong close on Friday that saw the market gain 1.56 percent or 67.89 points. The S&P 500 hit its low of the week on Thursday at 4,347 before reversing and moving higher. Prior to Thursday and Friday’s strong move, the market spent most of the week in a narrow range.
Oil prices continued their decline that began in October this week as West Texas Intermediate (WTI) fell to about $78 compared to almost $90 just a few weeks ago. Prices dipped to as low as $75 during overnight trading on Friday before rebounding. This has been largely the opposite of what some had expected at the outset of the conflict between Hamas and Israel.
There will a number of significant news announcements coming up this week as CPI, PPI and retail sales figures are set to be released. Analysts are expecting inflation to have eased to 3.3 percent on an annualized basis while prices are expected to have risen .1 percent. Analysts also expect that retail sales will shrink by .2 percent, which would likely have some effect on inflation figures going forward. In addition, inflation and employment reports are also going to be released in Australia and Great Britain, which could influence policy in the United States.