Equities continued to rise last week as virtually all major market indices moved higher. For domestic markets, small-cap stocks led the way as the Russell 2000 Index returned 1.8%. Large-cap and mid-cap stocks also moved higher with weekly returns of 0.5% and 0.8%, respectively.
Stocks Rally as Powell Guides to 50 in December
Fed Chair Jerome Powell signaled the pace of rate hikes would slow and could come as soon as the next meeting in December.
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A sharp rally to end the week resulted in a mixed equity picture. The S&P 500 finished up 0.7%, while the NASDAQ and Russell 2000 finished slightly in the red.
Optimists Rejoice a More Data-Dependent Fed
Equities surged on Wednesday as Chairman Powell spoke following another 75-basis-point increase in the federal funds rate. This helped bring equities into the green for the week.
Earnings season is moving. 20% of S&P 500 Index companies have reported their financial performance for the third quarter of 2021. The companies that have reported show earnings growth of 45% over the third quarter of 2020.
The S&P 500 Index was down 0.80% this week. There is concern supply chain issues may continue into next year leading to tighter margins. The spread of the Delta variant also contributed to downward pressure on the market this week.
The S&P 500 and NASDAQ finished near their all-time highs after a flat week. But once again, this masks weakness under the surface. The Russell 2000 Index of small caps fell 1.6%.
The S&P 500 inched up to again make a new all-time high led by tech mega-caps. Small caps were down 2.2% and continued their notable underperformance of late. Emerging markets remain down on the month but are not faring as bad as domestic small cap equities.
Equity indices languished on the week inside a very tight range. The S&P 500 gained 0.3% and the NASDAQ Composite gained 0.2% as heavyweights stalled. However, oversold names rallied as did small caps.
With a week having passed since Election Day, it would seem the path forward, politically speaking, should be relatively clear. Americans came out in force to cast their votes as the turnout for the 2020 election was the highest seen in 50 years, and as of last weekend, Joe Biden was declared by the Associated Press to be the president-elect.