US Tech Stocks Slammed; Bonds Gain

Good morning, and welcome to November and the end of daylight savings time.  Great for the mornings, but I don’t like darkness at 6 pm.  Thank goodness the elections are tomorrow, as I look forward to the absence of TV political ads.

• The Dow (-0.9%), NASDAQ (-2.0%), S&P 500 (-0.6%), and EAFE (+0.9%) were mixed for the week, with US stocks lagging their international counterparts.
• Taxable bonds gained 0.6% and tax-free municipal bonds gained 0.7% last week.  The 10-year Treasury yield fell 0.09% to finish the week at 4.91%, below the 5% threshold.
• Technology stocks, particularly the large AI names, got slammed last week, taking down all broad US stock indices.  This beating was a result of investors’ concerns with the massive spending by these companies on AI buildout, combined with less-than-stellar earnings.

In economic news:

• The Fed met last week and chose to leave interest rates the same.  However, the combination of a strong labor market, a robust economy, and higher inflation serve as a recipe for future interest rate increases by the Fed.
• The US GDP grew at a 3.4% annualized rate, exceeding expectations and well above the 2.2% growth rate seen in the prior quarter.
• The Fed-favored inflation gauge, Personal Consumption Expenditures (PCE), grew at 3.4%, in line with expectations, but still above the Fed target of 2%.
• Corporate earnings seasons is in full swing, and non-AI companies have produced excellent earnings, allowing for gains in the broader markets outside of those companies that led the way 2023 – 2025.

Interesting statistics:

• The selloff in big tech names in October lost $5 trillion in market value since October 6, yet the other 625 large US stocks gained $1.3 trillion during that same period.
• Despite the S&P 500 being down 0.6% last week, 9 of the 11 sectors of the market rose over 1%. No other down week in the S&P 500 since 1999 has produced more than 7 sectors being positive like that.
• The stock market has been up every 3rd year (the year following midterms) of a presidential term since 1946.
• Since 1950, the stock market was up for the next 6 months (Nov 1 – May 1) following the midterm elections.  Over those 19 periods, the stock market has gained over 7% but has gained an average of less than 1% from May 1 – Oct 31.  So, will the trend continue, or did I just jinx the markets like the TV announcer who says the field goal kicker has hit 19 straight?  Ask me on May 1 next year!

Have a great day and terrific week!

^{Source:  Yahoo Finance}

^{Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.}

^{The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.}

^{The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.}