The U.S. Week Ahead (Nov 18-22): Stocks Reach New Record Highs While Retailers’ Earnings Spied

Investors will receive another heavy wave of potential market-moving events in the week ahead, as the nearing holiday season is likely to spur skeletal staffing at most financial sector firms.

The heavy calendar includes the minutes from the Federal Open Market Committee’s (FOMC) most recent two-day meeting, as well as updates on the nation’s housing and manufacturing activity.

A recent cooling in the U.S.-China trade battle, as well as some healthy financial results – especially in the semiconductor space – combined with continued strength in the retail sector and an upbeat October employment report, has sent stocks skyrocketing ahead of the weekend.

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The S&P 500 reached a new record high intraday Friday, highlighted by a surge of nearly 8.9% in the shares of chip-maker Applied Materials (NASDAQ: AMAT), which generally reignited confidence in the semiconductor business with its upbeat earnings and outlook.

The S&P has risen over 24.15% year-to-date and has gained almost 32.5% from its latest 52-week low set on December 24, 2018.

The yield on the 10-year U.S. Treasury note also remained elevated at around 1.83% intraday Friday, an increase of roughly 35bps from its recent low set at the start of September.

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The week ahead is likely to pose few surprises on the monetary policy front, with the FOMC set Wednesday to release the minutes from its two-day meeting that ended with a 25-basis point rate cut on October 30.

Federal Reserve chair Jerome Powell has said that the committee views “the current stance of policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent” with its outlook.

Investors have been generally scrutinizing the FOMC for their stance on monetary policy this past year, after U.S.-China trade tensions, slowing global growth, weak domestic fixed investment and sluggish inflation helped reverse their hawkish agenda – and instead spurred a trio of rate cuts.

To date, the latest decision by the FOMC to slash the target range for the federal funds rate by another 25bps to 1.50%-1.75% is widely expected to remain in place, at least through year-end.

Recent quotes about the future implied probability the central bank will elect to cut rates by an additional 25bps at the conclusion to its two-day monetary policy meeting on December 11 were just north of 4.0%, with an overwhelming majority of just over 95.5% anticipating no change.

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Disclosure: The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the ...

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