US stock indexes delivered mixed results last week, with S&P 500, DJIA, and Nasdaq reaching record highs, while the Russell 2000 Index declined after weeks of outpacing larger-cap peers. Growth stocks outperformed value stocks by 5.5ppts, the widest gap since March 2023. Labor market reports signal recovery, with the US adding 227k jobs in November, surpassing expectations. The unemployment rate ticked up to 4.2%, but markets reacted positively to the strong job growth ahead of the Fed’s December meeting. Fed officials provided mixed signals about rate policy. Governor Waller supported a December rate cut, while Chair Powell adopted a cautious stance. Market expects 25bps cut on the next meeting. Treasury yields declined, and investment-grade corporate bonds performed well.
European stock markets ended higher, with the STOXX Europe 600 Index gaining 2.0%. Investors appeared optimistic, expecting the ECB to further ease monetary policy. In France, political instability briefly shook markets after Prime Minister’s government fell. A no-confidence vote blocked the proposed 2025 budget, leading to concerns about eurozone stability. The yield gap between German and French bonds briefly spiked to its highest level since 2012. President Macron reassured markets by promising to form a new government soon. Economic data painted a weaker picture for Europe. Retail sales in the eurozone fell by 0.5% in October, reversing a small rise in September. Germany’s economy also struggled, with industrial output down 1.0% and factory orders dropping 1.5%, especially for machinery.
