The PULSE: Global Economic and Market News for Wednesday, November 27, 2024

U.S. Stock Market Overview

The major indices in the U.S. faced declines due to underperformance in the technology sector and ongoing economic uncertainties:

• S&P 500: Down by 0.4%, closing at 4,595.
• Dow Jones Industrial Average: Fell by 0.3% to 35,180.
• Nasdaq Composite: Declined 0.6%, weighed down by tech-heavy losses.

Key Contributors to the Decline:

• Nvidia (-3.2%): The stock suffered after concerns over weaker-than-expected demand for AI chips in China.
• Microsoft (-1.8%) and Broadcom (-2.5%): Slipped amid overall sector weakness.
• HP Inc. (-6.4%) and Dell Technologies (-5.7%): Both dropped sharply after issuing tepid earnings forecasts, signaling a slowdown in the PC market.

Economic Data Highlights

1. U.S. GDP Growth:some text
   • The economy grew at an annualized rate of 2.8% in Q3, slightly revised from an initial estimate of 2.7%.
   • Key drivers included consumer spending, particularly in services such as healthcare and travel, and a modest increase in exports.
2. Inflation:some text
   • The PCE price index, the Federal Reserve's preferred gauge of inflation, ticked up to an annualized 2.3% in October from 2.1% in September, signaling persistent inflationary pressures.
   • Core PCE (excluding food and energy) edged up 0.2% month-over-month.
3. Labor Market:some text
   • Weekly jobless claims came in at 225,000, marginally higher than the previous week, signaling a slight softening in labor market conditions.

Federal Reserve Expectations

Market participants largely expect the Federal Reserve to maintain its stance on gradually easing monetary policy, with one more rate cut anticipated in December. Analysts suggest the central bank is treading cautiously as it balances the need for sustained economic growth against the risks of reigniting inflation.

Geopolitical Developments and Their Economic Impact

1. President-elect Donald Trump's Proposed Tariffs:some text
   • 10% on Chinese imports: Targeting electronics and consumer goods.
   • 25% on imports from Canada and Mexico: Focused on automotive and agricultural products.
   • Economists warn these tariffs could:some text
     • Erode global economic growth by 0.5% in 2025.
     • Disrupt supply chains, particularly in technology and agriculture.
     • Increase inflationary pressures on imported goods for U.S. consumers.
2. Middle East Ceasefire:some text
   • A temporary ceasefire between Israel and Hezbollah provided a momentary boost to oil market stability. However, concerns over long-term geopolitical risks remain high.

Global Market Reactions

1. Equities:some text
   • European stocks: Mixed performance, with the STOXX 600 down 0.3% as investors digested U.S. tariff news and weak eurozone consumer confidence data.
   • Asian markets: Mostly closed lower, with the Nikkei 225 dropping 1.1% due to yen strength and concerns over reduced U.S.-China trade prospects.
2. Oil Markets:some text
   • Brent crude hovered around $82 per barrel, down 0.6% as traders awaited the outcome of next week’s OPEC+ meeting, where production cuts are on the agenda.
3. Currency Markets:some text
   • The U.S. dollar fell against a basket of currencies, with the dollar index down 0.2% to 103.2.
   • The Japanese yen strengthened to ¥142.30 per dollar, reflecting a safe-haven demand amid trade concerns.

Technical Market Insights

• Analyst Tom DeMark highlighted that major U.S. indices are nearing trend exhaustion levels, particularly as the holiday season often triggers profit-taking.
• His models indicate the market may be at both a short-term and long-term high, with a potential correction of up to 5% in the coming weeks.

Sector-Specific Developments

1. Technology:some text
   • The sector bore the brunt of today’s market downturn, with high-valuation stocks particularly vulnerable to macroeconomic headwinds.
2. Energy:some text
   • Despite volatility, energy stocks like ExxonMobil and Chevron were buoyed by optimism over potential OPEC production cuts.
3. Retail:some text
   • Early holiday shopping reports suggest a modest increase in sales, driven by online retailers like Amazon and Shopify, though brick-and-mortar stores are struggling.

Sources: Reuters (https://www.reuters.com/markets/global-markets-wrapup-1-2024-11-27/)

, MarketWatch (https://www.marketwatch.com/story/technical-analyst-demark-says-his-models-are-flagging-major-caution-for-the-holiday-week-87b79927)

, AP News (https://apnews.com/article/873db18423f9be7398aeebbf4a94bef4)

, Investors.com (https://www.investors.com/market-trend/stock-market-today/)

, The Australian (https://www.theaustralian.com.au/business/economics/trumps-tariffs-time-bomb-a-destructive-economic-weapon/)

, Bloomberg (https://www.bloomberg.com/markets)

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