Markets Looking To Bounce Back From Downward Week

U.S. indices are indicating an upwards start to the week, after experiencing a significant pullback to end the past week. The S&P 500 Index (INDEXSP: .INX) closed Friday with a 1.32% decline, down 2.30% on the week, as the Dow Jones Industrials Index (INDEXDJX: .DJIA) fell by 0.70% to end the week down 1.39%. The Nasdaq 100 Index (NASDAQ: NDAQ) saw a more pronounced loss of 2.40%, to end the week 3.67% in the red.

These movements in the market come in the wake of hawkish comments from the Federal Reserve, which have significantly diminished expectations for rate cuts. The perceived likelihood of a rate cut next month plummeted from 82% to just 58% following the Fed's statements.

Adding to the market's bearish tone, vaccine makers and pharmaceutical stocks experienced a sell-off after it was announced that President-elect Trump has chosen a vaccine skeptic to head the Department of Health and Human Services. This has caused additional anxiety among investors regarding the future of healthcare policies and their impact on the industry.

Nonetheless, October's retail sales numbers have provided a glimmer of optimism, showing a 0.4% month-on-month increase, with September's figures also being revised upwards. This economic data may indicate resilience in consumer spending despite the broader market concerns.

In terms of corporate earnings, the S&P 500's recent reports have been a mixed bag. Approximately 75% of reporting companies surpassed their quarterly estimates, recording an average earnings increase of 8.4% from the previous year. These figures suggest that while some sectors may be struggling, others continue to thrive in the current economic landscape.

Looking overseas, European government bond yields displayed mixed results, reflecting the diverse fiscal and economic conditions across the region. The 10-year German bund yield experienced an uptick, whereas the 10-year UK gilt yield followed the opposite path, indicating varying investor sentiment and outlook within Europe's major economies.

As we move closer to the end of the year, the market remains cautious, parsing through varying signals from economic indicators, central bank policy, corporate earnings, and political developments. Investors would do well to stay informed and prepared for potential volatility in the coming months.