Most major US stock indexes declined last week, except for the Nasdaq Composite, which hit a record high above 20,000, supported by strong gains in Tesla (+12.1%) and Alphabet (+8.4%). Growth stocks continued to outperform value stocks, while small caps underperformed large caps for a 2nd week. Inflation data showed prices rising steadily, driven mainly by higher housing costs. Meanwhile, the job market showed signs of slowing, with more people filing for unemployment claims and taking longer to find jobs. This reinforced expectations for the Fed to cut interest rates at its upcoming meeting, with markets seeing a 97% chance of a rate cut.
European stocks ended mixed, with the STOXX Europe 600 Index down 0.77%. Germany’s DAX and Italy’s FTSE MIB posted small gains, while France’s CAC 40 and the UK’s FTSE 100 declined. The ECB cut its key rate by 0.25% to 3.0%, signaling a possible continuation of rate cuts as it revised growth and inflation forecasts. In the UK, the economy unexpectedly contracted by 0.1% in October, matching September’s decline, due to weakened industrial and manufacturing output. The services sector showed no growth, but construction helped overall GDP rise slightly (0.1%) over the last three months. The BoE is likely to keep interest rates steady as inflation remains high. In France, François Bayrou was appointed prime minister, replacing Michel Barnier.
