Last week, the financial markets were like a surprise party with both balloons and a few popped corks. The S&P 500 and Nasdaq were the life of the party, notching their best monthly gains since the disco days of July 2020.

Why the cheer? A cocktail of falling Treasury yields and some appetizing inflation news stirred up the spirits. The core PCE price index, the Fed’s favorite financial hors d’oeuvre, rose just enough in October to not spoil the appetite, signaling a possible cooldown in the inflation kitchen.

In the Federal Reserve’s corner, there was a bit of a mood shift. Christopher Waller, usually a hawkish guest, surprised the crowd with a toast to the current policy’s success against inflation. And Jerome Powell, the Fed’s head DJ, spun a track of cautious optimism, hinting at a possible future rate-lowering dance if the inflation rhythm keeps its current beat.

Economic indicators were like a mixtape with varied tunes. Personal spending’s growth slowed to a mellow groove, perfectly in sync with income growth’s tempo. The housing market presented a remix of highs and lows, with permits up but starts down. Meanwhile, jobless claims did a little dip, but continuing claims hit a high note not seen since the tail end of 2021.

In the equity market bash, U.S. stocks strutted into the spotlight, with the Dow and S&P 500 hitting some snazzy high notes. Ulta Beauty sparkled under the disco ball, thanks to its smashing sales performance. Paramount Global and Apple flirted with a streaming services duet, causing a buzz in their stock values. On the flip side, Pfizer faced a bit of a party foul with its new weight-loss pill, and Microsoft found itself in a dance-off with Google over cloud computing clout.

Looking forward, the market’s playlist seems to be a blend of upbeat inflation tunes and the Fed’s measured beats, with a sprinkle of mixed economic signals. Investors are all ears for the next chart-toppers in this financial melody as we boogie into the new week.

As we gear up for the coming week, the stock market’s recent rally has investors abuzz, with the SPX teasing just shy of the 4,600 mark. It’s a bit like a high-stakes poker game, and all eyes are on whether the SPX can call the bluff and push past resistance. Meanwhile, the DJI is already scooping up the chips with a 52-week high, and the RUT is joining the fray, hitting a two-month peak. But the real question is whether this winning streak can hold if the SPX can’t up the ante.

With yields on the 10-year treasury taking a dip, it seems Fed Chair Jerome Powell’s latest remarks have market players reading between the lines, finding reasons to stay bullish despite the absence of groundbreaking news.

Looking to next week, traders will be donning their detective hats, deciphering clues from a slew of economic signals and earnings reports:

• Economic indicators are set to make headlines:
  • Tuesday’s JOLTS Job Openings might tell us if the labor market still has a strong hand.
  • Wednesday’s ADP Employment Change could hint at what’s coming in the labor market showdown.
  • Thursday’s Initial Jobless Claims will offer a snapshot of the employment landscape.
  • Friday’s Nonfarm Payrolls and accompanying data will be the ultimate reveal, potentially triggering the next market move.
• Earnings season continues with its own plot twists:
  • Gitlab opens the stage on Monday, with AutoZone and Signet Jewelers following suit.
  • As the week progresses, Campbell Soup and Chewy will serve up their figures, while Broadcom and Lululemon stretch into Thursday’s spotlight.

Amidst all this, the Fed’s narrative remains a page-turner. Fed Governor Waller’s dovish discourse seems to have softened yield’s stance more than Bowman’s rate hike rally cry. As the market digests these signals, the probabilities of a Fed rate cut versus a hike are like a seesaw in the playground of Bloomberg forecasts, adding a layer of intrigue to the mix.

With the market’s current trajectory, the path of least resistance points upwards, but this is a story where the next chapter is always uncertain. Investors should buckle up for a week where every data point could turn the page to a new market direction.

Across the Globe

• Henry Kissinger, a pivotal figure in international diplomacy, has passed away at 100. A century well-lived!
• In a remarkable turn of events in India, 41 workers emerge safely after being trapped for 17 days in a collapsed tunnel. A true testament to resilience!
• Francesco Bagnaia races to glory, clinching the MotoGP World Championship. Speed and strategy for the win!
• Literary circles are abuzz as Paul Lynch’s “Prophet Song” takes home the Booker Prize, celebrating the art of storytelling.
• Somalia steps into the East African Community, signaling new regional dynamics and opportunities.

On this Day, December 4

• India celebrates its naval prowess on Navy Day, a salute to maritime heroes.
• 1639 marks a milestone in astronomy with the first successful observation of a transit of Venus by Horrocks and Crabtree.
• The Mary Celeste mystery of 1872 continues to intrigue, a maritime enigma that remains unsolved.
• In a significant 1971 naval battle, the Indian Navy showcases its strategic might against Pakistan.
• 1980 saw the end of an era in rock music with Led Zeppelin’s disbanding.
• The 2006 Jena incident in Louisiana becomes a focal point for discussions on racial justice in the U.S.