The Major Markets saw new life last week after two weeks of losses. Moreover, the gains were significant as the Nasdaq added over 6.5%, with the S&P 500 adding 5.85% as well. For the S&P 500, this marked the largest gains in 51 weeks as the last time the index added this amount was almost exactly a year ago.
The gains were broad-based as all 11 sectors closed higher. This was also true in all nine style boxes and even the bond indices.
The positive sentiment came in a combination of pieces. First, the FOMC met on Halloween and All Saints Day midweek and held interest rates steady at the present levels. Additionally, Fed Chairman Jerome Powell’s comments were viewed as less hawkish, taking some of the fear away from interest rates rising further.
This was seen clearly within the CME Group’s Fed Watch tool. Previously, there was a significant possibility of another interest rate hike in Q1 of 2024. However, as of Friday, the odds of higher interest rates were around 15% or less.
This took a significant amount of pressure off of the yield curve, which dropped by as much as 28 basis points in the seven-year duration. This accommodative tone was well received by the markets. Especially given that some notable earnings releases missed the mark. That said, this week holds the largest amount of companies reporting before things begin to wind up at the end of earnings season.