MARKET FOCUS THIS WEEK

Market overview

In this holiday-shortened week, market watchers have their eyes on various critical factors that could sway market sentiments. The Federal Reserve’s meeting minutes, home sales data, jobless claims, durable goods orders and Michigan consumer sentiment will all be under the spotlight. Additionally, the kickoff of the Black Friday shopping season is anticipated as it gauges the resilience of the consumer-driven U.S. economy amid ongoing concerns about inflation and interest rates.


Equities optimism

Investor enthusiasm in equities has soared in recent weeks after a prolonged downturn. The retreat in Treasury yields has alleviated some pressure on stocks, with the S&P 500, Nasdaq, and Dow marking their third consecutive week of gains. While optimism prevails, investors remain watchful for indications of the Fed’s stance on interest rates.


Fed minutes

The Fed’s meeting minutes from its recent gathering are set to be released earlier in the week due to the Thanksgiving holiday. Investors are keenly awaiting insights into the central bank’s outlook on rate hikes amidst cooling inflation signals. Last week investors shrugged off Fed’s “Higher For Longer”, but doubts persist on renewed upward momentum of the stock market rally.


Oil prices and Eurozone data impact on oil

Oil markets, after a recent rebound, experienced their fourth consecutive weekly decline last week due to increased U.S. crude inventories and China’s economic challenges. Analysts anticipate OPEC+ extending output cuts into 2024 during its upcoming meeting to support oil prices. In the Eurozone, purchasing manager indexes, consumer confidence, and the German Ifo business climate index will be unveiled, offering insights into economic activity and European demand.


Earnings focus

Nvidia’s earnings report, the final among the ‘Magnificent Seven’ mega cap companies, holds significance as its performance often influences broader market trends. Big Tech stocks like Apple, Microsoft, Alphabet, and Tesla witness varied revisions in their earnings forecasts, while Nvidia’s earnings significantly impact the market due to expected growth.


Nvidia’s potential to drive market movements is emphasized, especially considering its substantial earnings forecast increases and outsized influence on the S&P 500’s growth. Microsoft’s AI product releases at the Ignite conference and Nvidia’s announcement of the new HGX H200 AI accelerator remain key focal points in the tech sector this week.


Trade setup for this week

Last week’s strengths across S&P 500, Russell 2000, Nasdaq and the Dow Jones Industrial Average sets up the stage for a bullish Week. Last Friday was a good day for indexes, all of them were able to close near the highs of the week. The indices are all well-placed to kick on, but it’s the smallcap side of the market that needs to take out its weekly high. Thanksgiving is critical to getting this index back on track.


The weekly charts for the S&P 500 and Nasdaq do look a lot more healthy. Since the ‘bear trap’ three weeks ago in the S&P 500, they have had a good bounce off the 200-DMA lows. With a short trading week, most of the action will take place today, Tuesday and Wednesday.


Conclusion

The market sentiment seems to be influenced by a mix of factors including Fed policy expectations, tech earnings, oil market dynamics and Eurozone economic data, making it a crucial week for investors across sectors.


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