Markets Erase Recent Losses as Tech Surges and Fed Expectations Shift

Wall Street experienced a strong Thanksgiving week, largely erasing losses from the preceding volatile period. Increasing hopes of an interest rate cut by the Federal Reserve in December helped fuel the rally. After a shaky few weeks, tech stocks surged last week, driving the NASDAQ to its largest weekly gain in quite some time. As more economic data is released following the reopening of the federal government, investors are able to get a better grasp on the state of the economy. For instance, initial job claims fell, while durable goods orders and retail sales rose. However, producer prices also advanced, further evidence of escalating inflationary pressures. Each market sector ended last week with gains, led by Consumer Discretionary, Communication Services, Materials and Information Technology. The yield on 10-year Treasuries continued to slip as growing expectations of a rate cut helped push bond prices higher, weighing on yields. Oversupply continued to drag crude oil prices lower.

Producer Prices Rise in September; Energy Costs Lead Gains

The Producer Price Index increased 0.3% in September after falling 0.1% in August. Since September 2024, producer prices have increased 2.7%. In September, producer prices for goods rose 0.9%, while prices for services were unchanged from the prior month. Energy prices rose 3.5% in September, while prices for food advanced 1.1%. Prices less food, energy and trade services edged up 0.1% in September after rising 0.3% in August. For the 12 months ended in September, prices less food, energy and trade services increased 2.9%.

Eye on the Week Ahead

Important economic reports are gradually becoming available. However, the majority of the data released so far pertains to September.