John Hancock: Weekly Market Recap Week Ended December 5

Fed cut ahead?

Bond market trading continued to support expectations of an interest rate cut at the U.S. Federal Reserve meeting scheduled to end on Wednesday, December 10. At Friday’s market close, prices in rate futures markets implied an 87% probability that the Fed would cut by a quarter point, with just a 13% prospect of no change in the current rate, according to CME FedWatch.

Inflation moderation

The U.S. Federal Reserve’s preferred gauge for tracking inflation cooled slightly, potentially increasing the chances that the Fed will be open to cutting interest rates. Friday’s report on the Personal Consumption Expenditures Index found that core inflation rose at a 2.8% annual rate in September. While that’s above the Fed’s long-term 2.0% target, it’s below August’s 2.9% reading.

Confidence uptick

U.S. consumer sentiment is modestly higher than it was last month, based on Friday’s preliminary monthly report from a University of Michigan survey. The index’s initial December reading was 53.3, up from November’s final figure of 51.0. That marked a modest rebound following a string of recent monthly declines amid weakening jobs growth.

Inside Q3 earnings

Companies in the S&P 500 posted an average earnings gain of 13.4% over the same quarter a year earlier, according to FactSet data from the recently concluded third-quarter earnings season. That result marked the fourth consecutive quarter of double-digit growth. Information technology posted a 29.0% earnings gain, the highest among all 11 sectors.

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