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Friday Pre-Market Quiets, Indices Slightly Lower

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We enter this Friday morning with pre-market futures down slightly, and with no new majorly impactful data releases to affect investment trajectories ahead of the bell. That’s OK; we’ve had an eventful week — from housing data to PCE to Q3 earnings from important companies like Salesforce (CRM - Free Report) — so perhaps this is a good opportunity to review now that the smoke has cleared. Currently, the Dow is -8 points, the S&P 500 is -7, the Nasdaq -39 points and the small-cap Russell 2000 -2.

Only the Nasdaq is down over the past week of trading, with the blue-chip Dow leading the way, +1.9%. The past month of trading has been extraordinary, with the S&P +7.4%, both the Dow and Russell +7.9% and the Nasdaq +8.1%. This has helped all major indices improve trading year to date, with one month to go in the year: the Russell +2.8%, the Dow +8.2%, the S&P +18.8% and the Nasdaq up a stellar +45.7%, as 2023 has become the year of A.I. speculation.

We’re also seeing meaningful improvements on inflation metrics. This week alone, we’ve seen both new and pending home sales dip lower (Case-Shiller home prices were flat), PCE was flat on headline but lower on year-over-year core, trade balance sank lower but Chicago PMI was surprisingly strong. Initial Jobless Claims were up slightly but Continuing Claims were up big — headed toward 2 million in the next week or two, if trends hold.

Overall, market participants have clearly been encouraged: inflation is at last coming under control, though gradually — the better the escape a recession with. Consumer sentiment is up, so that portends a healthy holiday shopping season. The Fed won’t be raising rates again this cycle, and now the watch is on for when the monetary policy body might start cutting (hint: not too soon). In short, we’re set to close calendar 2023 as a nice rebound to a rather dismal 2022, especially on the Nasdaq/tech side.

After today’s open, we’ll see new Manufacturing data from S&P PMI and ISM, both for November, and both expected to improve month over month. Construction Spending for October is expected to tick down, and we’ll be hearing from Fed Chair Jay Powell and Chicago Fed President Austan Goolsbee today, among others. Auto Sales numbers will be filing in throughout the day, as well.

None of this is expected to dramatically alter current market conditions, and we might expect Friday (lower) volumes of trading. Next week brings us monthly jobs numbers, and they will tell the tale of the cooling economy. Bond yields currently sit at 4.685% on the 2-year and 4.318% on 10s. Happy Friday!

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