U.S.Stockโ Diary๏ฝTech Sector Shifts as Investors โEye Next Week’s Interest Rate Meeting
U.S. stocks exhibitedโข aโ mixed performance Thursday, โwith the market displayingโค caution ahead of next week’sโ Federal Reserve interest rate โฃmeeting. NVIDIA initially declined beforeโข closing upโค 2.1%. Microsoft stabilizedโ following an announcement โof priceโค increases for its productivity software. Apple and Amazon both fell by more โthan 1%.
Sectorโ rotationโฃ is gaining attention, withโค LPLโค Financial Chief Technical Strategist Adam Turnquist noting, “sector rotation โis โคoften โคseen as the source โฃof continued bull market momentum.โฃ This round of gains has been generally led by large-cap technologyโค stocks, โand fundsโฃ have subsequently flowed to other cyclical sectors.” Turnquist added, “However, funds have recently withdrawn from technology stocks and โคshifted to defensiveโฃ sectors. This is the first time since โฃthe rebound in april that there has been a clear risk aversion signal. Although thisโฃ may only be a correction from highs, it deserves โclose attention.”
Labor marketโ data presented a โคdual narrative. The U.S. Department โฃof Labor reported initial โunemployment claims fell to 191,000โข last week, theโ lowest level โขsince September 2022-a decrease โof 27,000 from theโ prior week andโค below the estimated 220,000. Continuing claims remained steady โคabove 1.9 million. โคConversely, Challenger, Gray & Christmas โreported U.S. โคcompanies announced 1.17 million layoffs through November, a 54% increase โyear-over-year and the highest total since 2020, with โฃ71,000 โlayoffsโค in November alone.
Royal Bank ofโข Canada has cautionedโ the U.S. economy may face โค”mild โขstagflation” in โคthe coming year, forecasting core โคinflation to remain above 3% for much of 2024. The bank โattributes this to high property prices driving service inflation, persistent wage inflation, tariff-driven goods inflation, and lowerโ productivity โขlinked to government spending.