Last week, US stocks added to their gains, with small-cap stocks leading the way. The Russell 2000, which represents smaller US companies, was up 1% last week and 5.10% for the year. In comparison, the S&P 500 returned 0.24% last week and 21.81% for the year. Small-cap stocks tend to outperform large-cap stocks in bull markets, during economic recoveries, and amidst accommodative monetary policies such as lower interest rates. Last week’s job data indicated a tighter labor market, evidenced by lower quits and job openings. However, the unemployment rate decreased from 3.90% to 3.70%, driven by increased hiring following the return of auto union workers.
This week, investors are bracing for a heavy dose of inflation data and central bank meetings. Tomorrow, the November Consumer Price Index (CPI) report will be in focus before the opening bell. The FOMC decision is due Wednesday, with the odds at almost 100% that the FOMC will maintain its target rate of 5.25-5.5%. Following their expected rate announcement, the market will analyze their comments and the updated dot plot to gauge current sentiment. Friday’s release of November’s retail sales is expected to show a 0.10% increase over the previous month. Stocks and bonds could rally on lower inflation, dovish Fed comments and guidance, and strong retail sales.
Check out the JP Morgan Weekly Market Recap for more information, and thank you for reading.
Have a great week!
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