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Market Moves You Need to See
Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research

Stocks Closed Higher For 3rd Week In A Row As Q4 Rally Continues

Stocks closed higher on Friday, and sharply higher for the week, making it 3 up weeks in a row.

For the Dow, it was the best 3-week period since late 2022. For the S&P and Nasdaq, you have to go all the way back to mid-2020.

Last week's better than expected Consumer Price Index (CPI), and Producer Price Index (PPI) confirm that inflation is on the decline. The core (ex-food & energy) CPI (retail inflation) is currently at 4.0% y/y. That's down from last year's summer high of 6.6%. And the core PPI (wholesale inflation) is at 2.4% y/y, also down from last year's summer peak of 8.2%.

Next week (11/30), we'll get the Personal Consumption Expenditures (PCE) index (the Fed's preferred inflation gauge). The last report showed inflation at 3.7% y/y, down from last year's peak of 5.3%.

That'll be the last inflation report before the next FOMC meeting on 12/13.

But the writing is likely already on the wall for what the Fed will do.

With inflation on the decline, the Fed has confirmed they are nearing the end of their rate hike cycle (if they haven't already hit it). After pausing on rates for two meetings in a row, there's a growing likelihood that they may pause yet again when they meet in 3½ weeks, and possibly call it quits.

Then after UBS came out last week suggesting the Fed could cut rates by as much as -2.75% next year (bringing the Fed Funds rate down to a midpoint of 2.63%), more and more people are expecting a bigger Fed pivot than they themselves are currently projecting, and sooner too.

We shall see. But the mere fact that we are nearing the end of the rate hike cycle is bullish enough.

In other news, Friday's Housing Starts and Permits report ticked up to 1.372 million units (annualized) vs. last month?s 1.346M and the consensus for 1.350M. Permits rose as well to 1.487M vs. last month's 1.471M and views for 1.463M.

And E-Commerce Retail Sales were up 2.3% q/q vs. last period's upwardly revised 2.2%.

We've got a shortened trading week this week with the market closed on Thursday, 11/23, for Thanksgiving Day. And the market closes early on Friday, 11/24, for Black Friday.

In the meantime, after a slow start to Q4, the markets have been on a tear. And the long-awaited Q4 rally has so far proven to be worth the wait.

We still have 6 more trading weeks to go before 2023 comes to a close. Could it be as spectacular as the last 3 weeks? Who knows. But the seasonal trends and statistics are all suggesting we could see a strong finish.

So make sure you're taking full advantage of it.

See you tomorrow,

Kevin Matras

Executive Vice President, Zacks Investment Research


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