Stocks Hit All-Time Highs as Powell Signals Economy's Strength

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Stock Market,Federal Reserve,Jerome Powell

Stock markets climbed to new highs as Federal Reserve Chair Jerome Powell expressed optimism about the economy's health, despite the French government's collapse following a no-confidence vote. Tech giants led the Nasdaq and S&P 500 to record closes, with Nvidia leading the 'Magnificent Seven' megacaps. Powell suggested a cautious approach in lowering interest rates, reflecting a slightly hawkish stance but not challenging market expectations for a December rate cut.

-- Stocks hit all-time highs as Federal Reserve Chair Jerome Powell said the economy is in remarkably good shape. The euro wavered as the French government fell after a no-confidence vote in Parliament.

One of Powell’s favorite barometers of the economy — the Beige Book — showed economic activity increased slightly in November, and businesses grew more upbeat about demand prospects.Treasury 10-year yields declined four basis points to 4.18%. French bond futures held onto earlier gains after far-right leader Marine Le Pen joined a left-wing coalition to topple the government, setting the stage for further political wrangling that has weighed on the nation’s assets for months.

Despite the seasonality, Smith doesn’t rule out the possibility of short-term weakness, especially as geopolitical threats have the potential to escalate. Equities may also need to readjust to what may be a slower and shallower Fed rate-cutting cycle than markets are currently pricing in, he noted. “Statistically , the impact of 2024’s big gains has made the market look riskier for long-term investors, but potentially safer for near-term speculators,” the Leuthold Group’s Doug Ramsey wrote this week. Leuthold’s major trend index — which takes into account many different kinds of indicators — remains at a “high neutral,” but all of the indexes in the MTI closed last week with maximum-bullish readings.

“The bar for success is now a lot higher for an economy that may still be in flux,” Cox said. “Yields show that expectations have moved a lot over the past two months, yet we haven’t seen any sustained, clear momentum in economic data. Expectations matter, and the job market is under a microscope.” While American equities have persistently outpaced their global peers, BlackRock Investment Institute says that could continue. The US benefits more from “mega forces,” driving corporate earnings, the firm notes. That is supported by a favorable growth outlook plus potential tax cuts and regulatory easing.

Foot Locker Inc. cut its full-year sales and profit forecasts, citing more discounts and a pullback in consumer spending ahead of the crucial holiday season.

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