At a Glance – Key Takeaways
- The S&P 500 advanced 1.5% this week as it hit new a high crossing the 6,000 level for first time.
- The Bond market registered gains this week as 10-year Treasury yields declined to 4.26% from a two-week high of 4.50%.
- It is taking Americans longer to find work as evidenced by continuing jobless claims which have recently hit a three-year high.
Reaching New Highs
The S&P 500 posted a new high as it gained 1.5% this week crossing the 6,000 level. It has been just 278 days since the S&P 500 reached 5,000. Compared to the last move from 4,000 to 5,000 when the Technology sector drove valuations higher, this time around it is a much broader mix of sectors. At 3.95%, the S&P 500’s earnings yield is 31 basis points below the 10-year Treasury rate, levels not seen since the dotcom bubble. While markets appear expensive, segments of the market appear more properly valued, so our cautiously optimistic view remains for growth in 2025.
Small cap holdings also advanced up 2.6% on the week as the Russell 2000 was led by the Technology and Consumer Discretionary goods sectors due to holiday shoppers seeking out pre-Black Friday sales. Estimates from the National Federation of Retailers expects holiday spending to rise from 2.5 – 3.5%, which is down from 3.9% in 2023. Part of this decline is attributed to having just 26 days to finish shopping between Thanksgiving and Christmas, five days shorter than last year.
Bond market returns of 0.8% this week reflect advances across the curve as traders settle into what they hope to be lower inflationary readings on Wednesday. Over the last two weeks, 10-year Treasury yields have tumbled from a high of 4.5% to 4.26% as traders put aside fears over the inflationary impact of potential new policy initiatives.
Initial jobless claims declined as employers retained workers ahead of the holiday, but continuing claims rose to a three-year high. This suggests it is taking longer to find work. Sales of existing homes increased 3.4% last month as inventory available could satisfy 4.2 months’ worth of purchases at the current pace. Mortgage applications continue to pick up this week as buyers took advantage of lower 30-year fixed mortgage contract rates which fell slightly to 6.86%.
The University of Michigan Consumer Sentiment Index rose 1.3 points to 71.8, its fourth consecutive monthly increase. Consumers’ median 12-month outlook showed inflation expectations fell to 2.6%, which is down from 2.7% in October.
 |
 |
Sources: BTC Capital Management, ICE BofAML, MSCI, Institute for Supply Management, Bureau of Labor Statistics, Standard & Poors, S&P Global and National Association of Realtors, Conference Board, U.S. Census Bureau
The information provided has been obtained from sources deemed reliable, but BTC Capital Management and its affiliates cannot guarantee accuracy. Past performance is not a guarantee of future returns. Performance over periods exceeding 12 months has been annualized.
This content is provided for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Statements in this report are based on the views of BTC Capital Management and on information available at the time this report was prepared. Rates are subject to change based on market and/or other conditions without notice. This commentary contains no investment recommendations and should not be interpreted as investment, tax, legal, and/or financial planning advice. All investments involve risk, including the possible loss of principal. Investments are not FDIC insured and may lose value.