The U.S. equity market delivered small declines over the holiday shortened week. The decline registered across all market segments with the broadest measure, the Russell 3000 Index, returning -0.5%. As has been the case throughout 2024, growth stocks performed slightly better than value stocks for the week. The differential was not great as the Russell 3000 Growth Index returned -0.2% versus the -0.9% return from its value counterpart, the Russell 3000 Value Index. Foreign equities produced a slightly larger decline for the week as the return for the MSCI EAFE Index came in at -1.2%. Fixed income returns were also slightly negative as broad bond market indices generated a return of -0.3%. The relatively flat performance for bonds this week is reflected in the very small increase in the yield for the 10-year U.S. Treasury, which saw its yield bump up to 4.59% from the prior week’s level of 4.51%.
Third Quarter GDP Surpasses Estimates
The final estimate of third quarter GDP was released during the week coming in at 3.1%. This result was higher than the projected level of 2.8%. Consumer spending and exports were both revised higher compared to the previous estimate. FactSet Research currently estimates that fourth quarter GDP will see a decline in momentum with an anticipated result of 2.1%. If that estimate proves to be accurate, year over year GDP growth will be 2.7%, in line with 2023’s 2.9% growth. Currently, the Federal Reserve Bank of Atlanta’s GDPNow model is anticipating a fourth quarter growth rate of 3.1%.
Leading Indicators Turn Positive
The Conference Board’s Leading Economic Index (LEI) increased by 0.3% for the month of November, its first increase since February 2022. The higher reading was attributed to strong equity market performance, a move higher in building permits, improvement in average hours worked in the manufacturing sector and a lower level of initial unemployment claims. With the move to a positive reading last month, the LEI is no longer pointing to an impending recession. In addition to the positive result for the leading indicators last month, the results for the coincident and lagging indicators were also positive.
Consumer Confidence Measure Sees Ongoing Improvement
The Michigan Consumer Sentiment Index rose from 71.8 to 74.0 this month, its fifth consecutive increase. It has now reached its highest level since April. Driving the increase was a belief among consumers that the economy has continued to improve. Although the recent readings are increasing, it is important to note that the index is still well below pre-pandemic readings.
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Sources: BTC Capital Management, FactSet Research Systems Inc., Federal Open Market Committee (Federal Reserve) LSEG I/B/E/S, FTSE Russell (an LSEG Group company), S&P Global, U.S. Bureau of Labor Statistics, U.S. Census Bureau
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