As Thanksgiving approaches, Wall Street experiences a slight downturn after recent record highs, with the Dow Jones, S&P 500, and Nasdaq all declining. Despite a drop in interest rates and positive economic indicators, including a revised GDP growth rate of 2.8% and a year-over-year rise in the PCE price index, the market remains cautious. New unemployment claims decreased slightly, while housing data showed mixed results, indicating ongoing economic adjustments by the Federal Reserve.
Wall Street’s Pre-Thanksgiving Market Update
As we approach the Thanksgiving holiday, Wall Street is witnessing a minor pullback after recently hitting record highs. The Dow Jones has dipped by 0.3% to 44,722, while the S&P 500 has seen a slight decline of 0.38%, hovering just below the 6,000 threshold. The Nasdaq has decreased by 0.8%, with significant drops from major players such as Broadcom (-3%), Micron (-3.7%), Autodesk (-8.5%), and Dell (-12%). On average, the GAFAM stocks have also fallen by 1%.
Economic Indicators Ahead of Thanksgiving
Despite a notable reduction in interest rates—down 5.5 basis points on the 10-year yield to 4.25% and 5 basis points on the 30-year yield—Wall Street hasn’t fully capitalized on the positive economic signals. A series of impressive U.S. economic indicators were released, providing insights just before the Thanksgiving festivities.
The revised GDP growth rate for the U.S. economy stood at 2.8% on an annualized basis for the third quarter, as reported by the Department of Commerce. This upward revision in investments was counterbalanced by a downward adjustment in exports and consumer spending.
The most closely watched figure, the Personal Consumption Expenditures (PCE) price index, rose by 2.3% year-over-year in October, aligning with expectations following a 2.1% increase in September. The core PCE also matched forecasts, increasing by 2.8% annually, up from 2.7% the previous month.
Additionally, the Department of Labor reported 213,000 new unemployment claims for the week ending November 18, a decrease of 2,000 from the previous week, which was revised to 215,000. The number of individuals receiving unemployment benefits rose by 9,000 to reach 1,907,000 during the week of November 11, marking the highest level since November 2021.
In housing news, pending home sales in October increased by 2%, contrary to expectations of a 2.1% decline, following a robust 7.5% rise in September. Moreover, durable goods orders experienced a slight uptick of 0.2% between September and October, rebounding from a 0.4% decline in September. When excluding the transportation sector, durable goods orders rose by 0.1% month-over-month.
Lastly, new home sales promises also saw a 2% increase in October, defying predictions of a 2.1% drop, continuing from a strong September performance.
In summary, the minutes from the latest Federal Reserve meeting revealed that the central bank has not set a specific course for monetary policy and will continue to adapt based on the unfolding economic data.