Fri Nov 15 23:20:37 UTC 2024: **Market Volatility and Postelection Rally Fizzle**
**New York, NY (November 17, 2024)** – Stock markets experienced significant declines on Friday, marking the end of a postelection rally and triggering concerns about interest rate adjustments. The Dow Jones Industrial Average fell 305.87 points (0.70%) to 43,444.99, the S&P 500 dropped 1.32% to 5,870.62, and the Nasdaq Composite plummeted 2.24% to 18,680.12. This follows a week of losses, with the S&P 500 down 2.1%, the Nasdaq down 3.2%, and the Dow down 1.2%.
Pharmaceutical stocks and the technology sector were particularly hard hit. Concerns arose from President-elect Trump’s nomination of Robert F. Kennedy Jr. to lead the Department of Health and Human Services, given Kennedy’s vaccine skepticism. This led to significant losses for companies like Amgen and Moderna, and a substantial drop in the SPDR S&P Biotech ETF (XBI). In the tech sector, Nvidia, Meta Platforms, Alphabet, and Microsoft all experienced declines, although Tesla bucked the trend.
The Federal Reserve’s cautious stance on interest rate cuts further fueled market uncertainty. Chair Jerome Powell and other officials indicated that a rate cut is not imminent, despite October retail sales showing a slight increase (0.4%). This contrasts with recent statements suggesting a possible December rate cut. Market expectations for a rate cut in December have fallen significantly in the past few days from as high as 82% probability to around 60%.
Further dampening investor sentiment, some analysts expressed concern about weakening corporate earnings. FactSet reported that while Q3 2024 earnings growth remains positive, the percentage of companies exceeding analyst expectations is lower than the five-year average, and the magnitude of the exceedance is significantly less. Moreover, a significant portion of S&P 500 companies have issued negative guidance for Q4 2024. The forward price-to-earnings ratio for the S&P 500 is also above historical averages.
In contrast to the broader market downturn, some sectors showed resilience. Goldman Sachs issued buy ratings for several airline stocks (Alaska Air Group, Delta Air Lines, and United Airlines), citing supply constraints and improving capacity discipline. Conversely, sell ratings were given to JetBlue Airways and Southwest Airlines. Bloom Energy also saw significant gains, driven by a positive analyst upgrade.
Small-cap stocks, which had initially benefited from the postelection rally, experienced substantial losses this week, with the Russell 2000 falling around 4%.
Despite the recent volatility, some analysts, like BlackRock’s Rick Rieder, remain optimistic about the long-term outlook for the US equity market, although anticipating continued short-term fluctuations. The overall situation highlights a complex interplay of political appointments, economic data, and Federal Reserve policy affecting market sentiment.
First Piper 