Commentary
Global equities rallied during past week, with S&P 500 delivering the strongest weekly gain in almost a year. In the US, small-cap stocks were the best performers, with value stocks generally outperforming their growth peers. As such, the performance was broad-based, as it usually is in response to favorable macroeconomic news.
The primary catalyst for last week’s rally was Fed’s policy meeting that left the rates unchanged at 5.25%-5.50%. On top of a much anticipated pause, the Fed officials made rather dovish statements, claiming that financial conditions seem restrictive enough at this point. As a result, yields declined considerably, with the 10-year US treasury yield falling from 4.85% to 4.54%.
On Friday, the US labor market data provided more positive news for stocks. The US economy added fewer than expected jobs in October, lifting unemployment rate from 3.8% to 3.9% (the highest since early 2022). Lastly, wage growth has also moderated from annual 4.3% to 4.1%, yet still standing above the Fed’s target level of 3.0%.
