Stocks just had its best week of 2024.

The three main indices pressured to reach record levels after Donald Trump won the 2024 presidential election.

For the week, the S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI) rose more than 4.5%, while the Nasdaq Composite (^IXIC) increased almost 6%.

Next week, a new reading on inflation and retail sales will headline the economic calendar.

In corporate news, Home Depot’s quarterly results (high definition), Cisco (CSCO) and Disney (DIS) will highlight another week of earnings reports.

Price inquiry

In a widely expected move, the Federal Reserve Cut interest rates by 25 basis points. last Thursday. In a press conference following the announcement, Federal Reserve Chairman Jerome Powell declined to comment on the central bank’s plans for future rate cuts.

“We don’t think it’s a good time to do a lot of forward guidance,” Powell said. He later noted that Federal Reserve officials will need to evaluate economic data released between now and December before knowing whether the central bank will cut interest rates again this year.

The first data the Fed will consider before its next meeting will be released on Wednesday with the release of the October Consumer Price Index (CPI). Wall Street economists expect headline inflation to have risen just 2.6% annually in October, up from a 2.4% rise in September. Prices are expected to rise 0.2% month on month, according to economists’ projections, in line with the increase seen in September.

On a “core” basis, which excludes food and energy prices, the CPI is expected to have risen 3.3% from a year ago in October, unchanged from September’s increase. Monthly increases in underlying prices are expected to reach 0.3%, also in line with September’s increase.

“The October CPI report will likely support the notion that the last leg of inflation’s journey toward the target will be the most difficult,” Wells Fargo’s economic team led by Jay Bryson wrote in a weekly note to clients on Friday. .

Retail reading

The final monthly retail sales report ahead of the start of the holiday shopping season will be released on Thursday. Economists estimate that retail sales rose 0.3% from the previous month during October. The control group of retail sales, which excludes several volatile categories such as gasoline and directly feeds gross domestic product (GDP), is also expected to have increased 0.3%.

At the time of publication, several observers point to the fourth quarter being off to a solid start for economic growth. He Atlanta Fed GDPNow Tracker It currently projects that the US economy will grow 2.5%.

Disney on the big screen

Disney is scheduled to report its quarterly results before the deadline on Thursday, as the media giant looks to continue improving its streaming business amid further declines in linear television. Investors will also focus on results within the company’s theme park business after the segment fell short in its most last quarter.

Streaming profitability should be a bright spot after the company reported its first quarter earnings for that business in August. The segment should get a boost from recent price increases along with the continued rollout of Disney’s crackdown on password sharing across its various platforms.

Shares are up about 9% this year.

Trump trade boosts Big Tech

In a big rally over the last three trading sessions of the week, there has been a lot of talk about trades like financials. who could benefit from the policies of President-elect Donald Trump.

Large technology companies also experienced significant benefits. Roundhill Magnificent Seven ETF (MAGAZINES) – which tracks Apple (AAPL), Alphabet (GOOGLE, GOOG), Microsoft (MSFT), Amazon (AMZN), Goal (GOAL), Tesla (TSLA), and Nvidia (NVDA) — hit new all-time highs on both Thursday and Friday.

three of the Magnificent seven Shares of Tesla, Nvidia and Amazon outperformed the S&P 500 during the week, and Alphabet also came close. Tesla had a unique catalyst related to Trump, and investors relied on that of CEO Elon Musk. big bet that the president-elect’s campaign will bear fruit.

Broadly speaking, markets appeared to be pricing in the potential for less government regulation on Big Tech in a second Trump term. Perhaps indicative of the tech industry’s high hopes, Amazon founder Jeff Bezos, Microsoft’s Satya Nadella, Meta’s Mark Zuckerberg and Alphabet CEO Sundar Pichai. Everyone was quick to congratulate Trump on his victory.

The week’s stock moves also coincided with a rise in Treasury yields, with the 10-year Treasury yield (^TNX) almost reaching 4.5%. Strategists have often cited a “flight to quality” environment as yields rise, where money flows to large corporations with strong profit growth and healthy balance sheets. Big Tech fits this mold and saw a rebound when yields rose again in spring.

Small Cap Resurgence

The small caps were one of the beneficiaries of the post-Trump election rally. The Russell 2000 (^ROUTE) small-cap index jumped more than 5% on Wednesday in its best day in nearly two years. It closed the week with a rise of more than 8%, its best week since April 2020 and is now approaching its all-time high.

This leaves investors with a question. that has been requested throughout 2024: Now that the Federal Reserve will continue to lower interest rates, is now the time to bet on small caps? In a Friday webinar, Michael Kantrowitz, chief investment strategist at Piper Sandler, said not yet.

The index has More short-term debt than the S&P 500. and would be a clear beneficiary of lower interest rates. But it also has another key difference with large-cap indices right now: Earnings estimates aren’t rising.

While Kantrowitz’s research shows that full-year 2024 earnings estimates for the S&P 500 have increased over the past 90 days, earnings estimates for the small-cap S&P 600 (^SP600) the index has been falling.

“Over the last 20 days…we’ve definitely seen small-cap estimates on the margin come down quite a bit,” Kantrowitz said.

He added that investors would like to see an acceleration in earnings to signal the start of a recovery.

“(It’s) not something we’re looking at yet,” Kantrowitz said. “So something we’ll be monitoring.”

weekly calendar

Monday

Economic data: There are no notable economic publications.

Earnings: Living Nation (LYV), monday.com (MNDY)

Tuesday

Economic Data: New York Fed One-Year Inflation Expectations, October (3.0% Previously)

Profits: Cava (DIGGING), Hertz (HTZ), house deposit (high definition), Instacart (CAR), Novavax (NVAX), Western Oil (OXY), waiting (ONON), Plug (PLUG), Shopify (TRADE), SoundHound (SOUND), Spotify (PLACE)

Wednesday

Economic data: MBA Mortgage Applications, week ending November 8 (-10.8% previously) Consumer Price Index, month-over-month, October (+0.2% expected, +0.2% previously); Core CPI, month-over-month, October (+0.3% expected, +0.3% previously); CPI, year-over-year, October (+2.6% expected, +2.4% previously); Core CPI, year over year, October (+3.3% expected, +3.3% previously); Average real hourly wage, year over year, October (+1.5% previously)

Earnings: Cisco (CSCO)

Thursday

Economic data: Initial jobless claims, week ending November 9 (225,000 expected, 221,000 previously); Producer Price Index, month-over-month, October (+0.2% expected, 0% previously); PPI, year over year, October (+2.3% expected, 1.8% previously)

Import prices, month-over-month, January (-0.1% expected, +0.0% previously); Export prices, month-over-month, January (-3.2% previously); Industrial production, month-over-month, January (+0.4% expected, +0.1% previously); NAHB Housing Market Index, February (44 before)

Earnings: Advanced Auto Parts (AAP), Applied Materials (AMAT), disney (DIS), JD.com (J.D.), Okló (OKLO)

Friday

Economic data: Retail sales, month-over-month, October (+0.3% expected, +0.4% previously); Retail sales excluding automobiles and gas, October (+0.3% expected, +0.7% previously); Import price index, month-over-month, October (-0.1% expected, -0.4% before); Month-over-month industrial production, October (-0.2% expected, -0.3% before)

Earnings: Alibaba (Slime), spectrum marks (SPB)

Josh Schafer is a Yahoo Finance reporter. Follow him on X @_joshschafer.

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