Mag7 returns to lead the market ahead of the October PCE

With the Election result and distortions now baked into the market the immediate focus is moving to the Economic news with at least one eye on bond yields as they respond to what Trump's policies could mean for inflation. The recent wholesale prices release showed that price rose 0.2% in October, annualised rate of 2.4%. This was in line with expectations and would appear consistent with a further interest rate cut this year. Important figures in the shortened Thanksgiving trading week include: Tuesday Consumer confidence were the best for 16 months, today's Personal Consumption Expenditure (PCE) figures for October has scope to move the market. Expectations are for 2.8% year on year.

The US Indexes were all up on Tuesday led by the Mag7. The VIX was flat at 15 on Friday, this seems too low considering the recent market swings. The main indexes on Tuesday were; DJIA +0.28%, S&P 500 +0.57% and Nasdaq +0.63% (Mag7 +1.32%). On an equal weighted basis (our measure) the overall market was -0.37% on Tuesday. Breadth of 37% (daily range of 22% to 71% over the last 10 days). Daily volumes of 9b (the range since the election is 8b to 13b). 

Daily returns on Tuesday: Mag7 +1.32% (AMZN +3.2%, MSFT +2.2%, META +1.5%, TSLA -0.1%), large cap -0.21%, medium cap -0.5%, small cap -0.8% and micro cap -0.13%.

Week returns as follows - equal weight basis: Market +4%, Mag7 -0.7% ( AAPL +3%, MSFT +2.7%, META +2.2%, NVDA -6.9%, GOOGL -5.1%), large cap +2.6%, medium cap, +4.3%, small cap +4.2% and micro cap +4.1%. 

Our risk monitor remains in favour of the larger cap stock. Micro caps have underperformed the market by 1.1% over the two weeks - this differential has fallen from a peak of 1.6% a week ago.

Sector wise it was an unusual day on Tuesday. Healthcare was the top performer and is now +5% over the last week albeit it is still lagging the wider market by c5% since the election. Utilities was the only other sector in positive territory on Tuesday, on the back of strong performance by Water Utilities +1.9% on the day. Black Friday plays helped the Consumer Cyclicals shine on Monday but this all reversed on Tuesday, with Consumer Goods being the worst sector on Tuesday. Energy sector slightly underperformed the market, Renewable Energy Equipment was +2.3% but Renewable Fuels -2.7%, Uranium was -0.5%. In Basic Materials Gold +1%, Silver +0.1% and Aluminum -1% all outperformed the market. In Technology the Fincap and Blockchain -5.1% stocks reversed for the second day on the run leading the sector to underperform the market.

A notable number of 52 week highs was seen in the following sectors: Consumer Cyclicals very strong (across there sector but Hotels and Media & Publishing very strong), Energy (Oil & Gas Equipment) , Financials, exceptionally high number, particularly Banking & Investment Services. Industrials was strong again (across the sector but Machinery, Tools, Heavy Vehicles was the strongest) and Technology very strong (Software & IT Services, Technology Equipment), Utilities (across the sector ex Water).

Notable high volumes in all sector: High levels in Basic Materials (Metals & Mining) Consumer Cyclicals (across the sector), Financials (across the sector), Healthcare (across the sector), Industrials (across the sector) and Technology saw a very high number (Software & IT Services, FinTech and Technology Equipment)