The S&P 500 has added 0.6% this week to its already strong 25% YTD gains. President-elect Trump’s recent appointments and strong stance on trade created uncertainty, though some believe it to be a negotiating tactic. Positive factors like a ceasefire between Israel and Hezbollah, supportive systematic fund strategies, and a resilient macro backdrop provided some balance.

This week’s housing data releases presented conflicting numbers with pending home sales surprisingly increasing while new home sales plummeted. The Chicago PMI, which measures business spending trends, undershot forecasts. The Treasury saw strong demand in its 7-year note auction, following successful auctions of 2-year and 5-year notes. Bond yields have declined this week on the heels of Trump’s well-received nomination of Scott Bessent for Treasury Secretary which may provide some near-term support to stocks.

President-elect Trump’s economic team appointments signaled a strong focus on tax cuts and tariffs. The selection of Scott Bessent as Treasury Secretary nominee, known for his support of tax reform and deregulation, was well-received by the stock market. However, Bessent’s past remarks on the need to address the national debt and his stance on tariffs suggest a potentially more complex economic agenda.

Trump’s announcement of additional tariffs on China, Mexico, and Canada introduced renewed uncertainty into the economic outlook. While these tariffs could potentially stimulate domestic production, they also carry the risk of disrupting global trade and escalating tensions with key trading partners. Market participants will be closely watching how these trade policies unfold and their impact on economic growth and inflation.

Several tech companies reported results. Dell missed sales expectations due to weaker consumer PC demand, while CrowdStrike and Workday saw strong Q3 performance overshadowed by weaker guidance. Autodesk flagged new business growth headwinds, and HPQ reported lighter PC sales. And, the Federal Trade Commission just announced that it has launched a sweeping investigation into the tech giant’s practices. Outside of tech, Nordstrom noted softening sales, and Guess missed earnings expectations. However, Urban Outfitters posted a strong beat driven by margin improvements.

Other economic data which was released painted a mixed picture. Consumer spending and income for October were strong, while durable goods orders showed improvement. However, core capital goods orders weakened, and continuing jobless claims rose. Q3 GDP remained unchanged at a healthy 2.8% growth rate. This follows 2.8% and 1.6% growth Q2 an Q1, respectively. Inflation remained relatively tame with core PCE in line with expectations.

The labor market showed signs of continued strength. Initial jobless claims remained steady, suggesting ongoing stability in the employment sector. Consumer confidence data also reflected optimism about the labor market, with more consumers viewing business conditions favorably and fewer anticipating a recession.

The Federal Reserve’s November meeting minutes indicated continued support for a gradual reduction in interest rates. However, policymakers acknowledged uncertainties around the neutral interest rate and emphasized the data-dependent nature of future policy decisions. With inflation remaining under control and the labor market showing resilience, the Fed appears to be taking a cautious approach to further rate cuts. The December rate cut still seems likely, though odds of no change have increased.

As we look toward the December holidays and the busy shopping season, investors will train their focus on incoming retail sales data. Actual impacts from Trump’s announced policies have now been discounted into markets, but investors know that the impact to stocks going forward is dependent on what actually gets implemented. Thus, the uncertainty and implications from trade, fiscal, and other economic policy changes remains an unknown. The Fed will likely have to adjust the magnitude and speed of its rate cut plans depending on the outcome of these uncertainties as well.

Enjoy the holiday weekend.

Felix Cavaliere, lead singer of the Young Rascals, turns 82 today, filmmaker Joel Coen (Fargo, The Big Lebowski) turns 70, politician Rahm Emanuel turns 65, and Hall of Fame Yankee pitcher Mariano Rivera turns 55.

Chris Gildea, CO-CIO, 610-260-2235

Tower Bridge Advisors manages over $1.3 Billion for individuals, families and select institutions with $1 Million or more of investable assets. We build portfolios of individual securities customized for each client's specific goals and objectives. Contact Nick Filippo (610-260-2222, nfilippo@towerbridgeadvisors.com) to learn more or to set up a complimentary portfolio review.

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