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Stock Market Wrap-Up: November 15, 2024 – A Day of Caution and Correction
The U.S. stock market closed on a sour note on November 15, 2024, as the post-election rally that had buoyed investor spirits began to lose steam. Several key factors contributed to this downturn, including a hawkish stance from the Federal Reserve and some disappointing corporate performances.
Market Benchmarks: A Day in the Red
The Dow Jones Industrial Average ($DJI) fell by 0.5%, or 207.33 points, to close at 43,750.86. This decline came despite an intraday high where the index was up more than 122 points. Of the 30 components of the Dow, 18 ended in negative territory, while 12 managed to stay in the green[1].
The tech-heavy Nasdaq Composite fared no better, finishing at 19,107.65 after a 0.6% drop, or 123.07 points. The major loser on this index was Super Micro Computer Inc. ($SMCI), whose stock price plummeted 11.4%. Despite this sharp decline, Super Micro Computer still carries a Zacks Rank #2 (Buy)[1].
The S&P 500 also suffered, dropping 0.6% to finish at 5,949.17. While ten out of eleven broad sectors of the S&P 500 ended in positive territory, the Consumer Discretionary Select Sector SPDR ($XLY), the Health Care Select Sector SPDR ($XLV), and the Industrials Select Sector SPDR ($XLI) were notable exceptions, plunging 1.4%, 1.6%, and 1.7%, respectively[1].
The Fed's Hawkish Tone
A significant contributor to the market's downturn was Federal Reserve Chairman Jerome Powell's speech on November 14. Addressing business leaders in Dallas, Powell made it clear that the central bank is in no hurry to cut the benchmark lending rate further. This stance was a stark contrast to market expectations, which had been hopeful for more aggressive rate cuts.
Powell emphasized that the economy is not sending any signals that necessitate a rush to lower rates. He highlighted the strength of the current economic landscape, noting that domestic growth is the best among any major economy in the world. The Fed fund rate, currently in the range of 4.50-4.75%, was reduced by 75 basis points in two consecutive FOMC meetings in September and November. However, Powell's comments reduced the market's optimism for further rate cuts, with the CME FedWatch tool now showing a 62.6% probability of a 25 basis point rate cut in December, down from 82.5% before his statement[1].
Economic Data: Mixed Signals
The economic data released on November 15 provided mixed signals. The Department of Labor reported that the Producer Price Index (PPI) for October increased by 0.2%, aligning with consensus estimates. This follows a 0.1% increase in September. On a year-over-year basis, the headline PPI rose 2.4% in October, up from 1.9% in September.
The core PPI, excluding volatile food, energy, and trade services items, rose 0.3% in October, after a revised 0.1% increase in September. Year over year, the core PPI increased 3.5% in October, indicating some inflationary pressures[1].
On the labor front, initial jobless claims decreased by 4,000 to 217,000 for the week ended November 9, beating the consensus estimate of 220,000. Continuing claims also decreased by 11,000 to 1.873 million for the week ended November 2, reflecting a stable labor market[1].
Sector Performance and Notable Losers
The market's decline was not uniform, with several sectors and stocks standing out for their poor performance. The Health Care sector, in particular, was hit hard, partly due to concerns over vaccine makers. President-elect Donald Trump's suggestion to appoint Robert F. Kennedy Jr., a prominent anti-vaccine activist, as Secretary of Health and Human Services sent shockwaves through the sector. Moderna ($MRNA) sank 7.1%, and Pfizer ($PFE) fell 3.4% as investors worried about potential impacts on their profits[4].
Applied Materials ($AMAT), a key player in the semiconductor industry, also had a dismal day despite reporting stronger-than-expected profits. The company's forecasted revenue range, however, fell short of analysts' expectations, leading to a 7.9% drop in its stock price[4].
Market Sentiment and Volatility
The fear gauge, the CBOE Volatility Index ($VIX), rose 2.1% to 14.31, indicating increased market anxiety. Trading volume was higher than the 20-session average, with 15.34 billion shares traded on Thursday. Decliners outnumbered advancers on the NYSE by a 1.8-to-1 ratio, and on Nasdaq, the ratio was 2.14-to-1 in favor of declining issues[1].
Conclusion: A Day of Correction
The stock market's performance on November 15, 2024, was a clear indication that the post-election euphoria is waning. The hawkish tone from the Federal Reserve and disappointing performances from key sectors and stocks contributed to the downturn.
As investors navigate this complex landscape, it is crucial to keep a close eye on economic data, central bank policies, and corporate earnings. The market's reaction to Powell's speech underscores the importance of monetary policy in shaping investor sentiment.
In the coming days, market participants will be watching for further economic indicators and any signs of a shift in the Fed's stance. For now, the cautious mood prevails, and investors are advised to remain vigilant and adapt to the evolving market conditions.
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