Markets Pause Ahead of Holiday and Conflicted Fed

By Scott Poore, AIF, AWMA, APMA
Chief Investment Officer, Eudaimonia Group

Equity markets were mixed last week as momentum stocks moved lower and defensive stocks generally held up.  Last week, Retail Sales showed that the consumer is still strong and the weekly retail data (Redbook Sales) shows the consumer is trending higher in November versus the four years prior to COVID.  We’re not out of the woods yet as the Housing market is still struggling and the regional Manufacturing data is mixed.  So far, the labor market is holding up well.  As we watch the consumer over the next several weeks, any kind of stabilization in housing and manufacturing could help solidify the view that the economy is past the technical recession of the first half of the year.

As we enter a holiday-shortened week, it’s a good time to remember that trading volumes drop during Thanksgiving week.  Over the past four years on average, trading during this week has been 17% lower than the other trading weeks of the year.  There are 3 Fed speakers this week, two of which are dovish.  Markets could move around a little this week as the doves might inspire equity buyers on Tuesday, while Fed minutes on Thursday might pour cold water on any such excitement.  Corporations and Hedge Funds are stepping in to greater equity exposure.  It’s best at these levels to be measured about taking more risk.  Best to keep some dry power on hand.

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