US Market Up Despite Geopolitical Risks: Dow Sets New Record

US Stock Market Ends the Week on a Positive Note

On Friday, November 22nd, 2024, the US stock market wrapped up a week of gains with a strong finish. The Dow Jones Industrial Average surged to a record high, closing up 1% for the day. The S&P 500 added 0.3%, while the Nasdaq Composite added 0.2%.   

The upbeat sentiment was bolstered by better-than-expected quarterly results from several major retailers, which lifted confidence in the consumer sector.

Additionally, the technology sector, which had been underperforming in recent months, showed signs of recovery, contributing to the broader market’s gains.

Positive Sentiment vs. Persistent Risks

Despite the strong finish, ongoing geopolitical tensions and concerns over potential interest rate hikes remain key factors that could temper the market’s positive momentum. The 10-year Treasury yield, holding steady at 4.40%, continues to act as a headwind for bullish sentiment.

Investors are keeping a close eye on geopolitical developments and the Federal Reserve’s next moves, particularly with the market pricing in a chance of no rate cut in December.

While the outlook for the US economy remains positive, supported by strong economic indicators and corporate earnings growth, these risks could inject volatility into the market.

Weekly Market Performance

For the week:

S&P 500 gained +1.7%

Nasdaq Composite rose +1.7%

Dow Jones Industrial Average led with a +2.0% climb

Friday’s Closing Levels

Index	Close	Change	% Change
Dow Jones	44,296.51	+426.16	+0.97%
S&P 500	5,969.34	+20.63	+0.35%
Nasdaq	19,003.65	+31.23	+0.16%
US 10-Yr Yield	4.40%
VIX	15.24	-1.63	-9.66%

Market Insights: What’s Driving the Action?

Key Takeaways from Last Week:

Volatility Persisted: The market saw wild swings through the week, with sell-offs followed by aggressive dip-buying. This cycle of selling and buying continued until the market ultimately closed higher for the week.

Strong Weekly Close: The positive takeaway was the higher close on a weekly basis,supported by strong buyingvolume at the close on both Thursday and Friday.

No New Highs: Despite the gains, the market failed to reach new highs, which may embolden bears to test downside levels in the coming sessions.

Challenges Ahead

Geopolitical Concerns and Interest Rate Fears

Geopolitical tensions continue to create uncertainty and weigh on investor sentiment. While such news has typically been brushed off quickly, further escalations could impact prices.

The 10-year Treasury yield, remaining elevated at 4.40%, is holding back some bulls, especially as expectations of a December rate cut have diminished.

The Risk of Disappointment

If the market fails to break through to new highs, bullish momentum could falter, potentially triggering renewed selling pressure as investors lose confidence.

Looking Ahead: Thanksgiving Week Caution

As we head into a shortened trading week due to the Thanksgiving holiday, investors should be prepared for:

Lower trading volumes, as many market participants will be away.

Higher volatility, which can result from thinner market liquidity during the holiday period.

While the market’s upward trend remains intact, the lack of new highs and lingering risks mean that traders should proceed with caution.

Source: CBOE, Bloomberg

This commentary is written by James Gomes, a seasoned finance industry veteran with extensive experience of over 30 years, including a substantial tenure at a reputable US bank exceeding 20 years.

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