Perspectiva del mercado

Last week domestic equities extended their nearly month-long rally, allowing the Russell 3000® to finish November with its best monthly performance in over a year. Small-and mid-cap equities outperformed large, and interest-rate-sensitive sectors, such as Financials and Real Estate, continued to rebound as financial conditions became less restrictive. However, the easing backdrop may be short-lived, as Federal Reserve (Fed) Chair Powell acknowledged on Friday, that further tightening may be necessary to help drive inflation toward the 2% target. Meanwhile, markets are currently priced for the Fed to enact a rate cut as early as March, which we maintain is far too premature a prediction considering the macroeconomic backdrop.

A slew of U.S. economic data releases are scheduled for this week, including the monthly payroll report. An anticipated rebound in the payroll data would support our view that monetary policy and interest rates are likely to remain higher for longer.

Gráfico de la semana

Market breadth, as measured by the percentage of firms above their 200-day moving average, is a technical analysis indicator that gauges broad market strength.

While the price of the S&P 500 is approaching its year-to-date high, market breadth remains approximately 20% below the levels from that same period.

We believe this phenomenon suggests the most recent market rally is based on momentum and the “fear of missing out” effect, rather than a positive shift in broad-based fundamentals.

Ver el gráfico de la semana