Speculation that the Federal Reserve may halt its raising cycle to avert a recession and calm bond market volatility sent stocks on track for their best stretch of weekly advances since July.
Stock index futures pointed to another day of gains for the S&P 500. Yields on 10-year Treasury bonds were stable at approximately 4.4%. The value of the dollar fell. After falling into a bear market, oil prices have now recovered, creating a difficult situation for OPEC+ officials as they prepare to reevaluate output objectives at the end of the month.
The market's upswing is becoming more widespread, according to Piper Sandler's Craig Johnson. The collapse of yields and the currency indicates that the Federal Reserve has completed its rate-hiking cycle. We anticipate the last "pop" phase of our annual market forecast to occur during this historically robust period of the year.
According to Michael Hartnett of Bank of America Corp., investors should sell risky assets following recent advances since technical and macroeconomic headwinds are strengthening.
The S&P 500's latest low has been followed by an "epic risk rally," he added. Hartnett advised investors to "fade it," referring to a rise characterized by contracting high-yield spreads, gains in small-caps, regional bank shares, distressed technology, and China-exposed assets.
According to the BofA note using data from EPFR Global, global stock funds drew $23.5 billion in the week ending November 15. This is the second-largest inflow of the year.
According to data compiled by Bloomberg Intelligence, high-quality companies are now priced at a premium to the market and to their low-quality counterparts on the basis of their profitability and debt levels.
Only in the years 2020 and 2008–2009, when widespread panic and instability gripped financial markets, did quality demand demand such significant value premiums. People flocked to secure high-quality assets during these times, driving up their prices.
Moreover, Joachim Nagel, president of the Bundesbank, has predicted that the European Central Bank will not reduce interest rates anytime soon.
