U.S.Stock Diary｜Tech Sector Shifts as Investors Eye Next Week’s Interest Rate Meeting
U.S. stocks exhibited a mixed performance Thursday, with the market displaying caution ahead of next week’s Federal Reserve interest rate meeting. NVIDIA initially declined before closing up 2.1%. Microsoft stabilized following an announcement of price increases for its productivity software. Apple and Amazon both fell by more than 1%.
Sector rotation is gaining attention, with LPL Financial Chief Technical Strategist Adam Turnquist noting, “sector rotation is often seen as the source of continued bull market momentum. This round of gains has been generally led by large-cap technology stocks, and funds have subsequently flowed to other cyclical sectors.” Turnquist added, “However, funds have recently withdrawn from technology stocks and shifted to defensive sectors. This is the first time since the rebound in april that there has been a clear risk aversion signal. Although this may only be a correction from highs, it deserves close attention.”
Labor market data presented a dual narrative. The U.S. Department of Labor reported initial unemployment claims fell to 191,000 last week, the lowest level since September 2022-a decrease of 27,000 from the prior week and below the estimated 220,000. Continuing claims remained steady above 1.9 million. Conversely, Challenger, Gray & Christmas reported U.S. companies announced 1.17 million layoffs through November, a 54% increase year-over-year and the highest total since 2020, with 71,000 layoffs in November alone.
Royal Bank of Canada has cautioned the U.S. economy may face ”mild stagflation” in the coming year, forecasting core inflation to remain above 3% for much of 2024. The bank attributes this to high property prices driving service inflation, persistent wage inflation, tariff-driven goods inflation, and lower productivity linked to government spending.
