The CME’s Fedwatch tool indicates a 99.4% probability of a 25 basis point rate cut on November 7th, 2024. This decision comes after the release of the October non-farm payroll report which failed to deter any movement in fed funds futures.

Impact of Mega-Cap Tech Earnings on S&P 500:
– Mega-cap tech earnings like Alphabet, Microsoft, Apple, and Amazon have significantly influenced the S&P 500.
– The LSEG “This Week in Earnings” chart showcases the net income chart for the S&P 500, emphasizing the dominance of these mega-cap names.

Improvement in Expected S&P 500 EPS Growth Rate:
– The expected Q3 ’24 S&P 500 EPS growth rate has seen a significant jump from +4.4% to +8.4% as of November 1, 2024.
– Communication Services expected EPS growth has doubled from +12.3% to +24.1%.

Sector Performance YTD:
– The XLF (Financial Sector SPDR Fund) has shown a YTD return of +26.77%, outperforming technology and only surpassed by Communication Services with a +28.85% YTD return.

Analysis and Future Predictions:
– The inverted yield curve’s impact on the financial system is a topic of concern with the possibility of two more 25 basis point fed funds rate cuts by the end of 2024.
– The 2’s – 10’s spread has been positive recently, but a return to a normal yield curve slope may not be seen until 2025.
– Nvidia’s inclusion in the Dow 30 and Intel’s exclusion may signal positive outcomes for these stocks, historically speaking.

In conclusion, understanding the current market trends, earnings reports, and sector performances can provide valuable insights for investors. It is crucial to stay informed and analyze the data to make well-informed financial decisions.

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