What Happened Last Week
Stocks Rose: S&P 500 closed within a hair of all-time highs on the back of easing growth concerns, Trump’s cabinet picks, and generally positive earnings reports.
NVDA Earnings: Strong, but not strong enough – the stock, despite ending flat on the week, did not prevent the NASDAQ 100 from outperforming the S&P 500.
Treasury Pick: After Friday’s close, Scott Bessent, Wall Street’s preferred candidate, was picked to lead Treasury.
What We’re Watching This Week
Inflation Data: PCE in the U.S. is unlikely to impact the Fed’s December decision, but Japanese and European CPI data could impact BOJ and ECB policy actions.
U.S. Growth Data: Consumer confidence, personal income and spending, and the second update of 3Q GDP are the economic highlights in a light week.
Retailer Earnings: Speciality retailers dominate the earnings calendar as the market looks for more positive consumer support.
Investment Management Team’s Views
- Global stocks rose on the back of U.S.-led strength last week as investors weighed the incoming newsflow around key Trump Cabinet picks, retailer and Nvidia (NVDA) earnings, and forward-looking economic survey data. The S&P 500 closed within 1% of its all-time highs on Friday, while small-caps more than unwound their weakness during the post-election week. Better earnings reports from many of the national retail chains likely contributed to the rally in small-caps and higher beta large-caps as growth concerns faded. NVDA’s earnings were strong but this was their smallest beat since the start of the AI investment cycle. Despite the relative weakness (flat on the week) in this key name, the tech-heavy NASDAQ actually outperformed broad large-caps.
- One key theme for market participants is discerning the policy priorities for the new Trump administration. The information on that front was generally market-friendly last week as Matt Gaetz withdrew his consideration for Attorney General and Howard Lutnick was tapped for Commerce and not Treasury (as had been rumored). Over the weekend, markets got what they have been really after – the nominee for Treasury Secretary. Scott Bessent is a steady hand that is well known and liked by the market; we expect last week’s positive price action to continue into this week and through the end of the year. But as the post-election week reminded us, the path higher is likely to be bumpy as competing factions in the new administration vie for power and influence.
- Turning to the shortened week ahead, we get inflation data out of the U.S. (PCE), Japan, and Europe. The international inflation data is likely to matter more for interest rates and currency movements given the relatively weaker growth backdrop ex-U.S. Secondary economic data in the U.S. is likely to be outweighed by a host of consumer-centric companies’ earnings reports.
