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While political drama, including speculation about Donald Trump’s return to the White House, has dominated recent headlines, financial market are about to face a critical reality check. The November jobs report, set to be released on Friday, could have significant implications for the Federal Reserve’s interest rate strategy, with ripple effects across stocks, bonds, and broader market sentiment. November Payrolls Could Shape the Fed’s Next Moves “The market is hoping for good news—but not too good,” said Brent Schutte, Chief Investment Officer at Northwestern Mutual Wealth Management. “If the jobs data is too strong, it could raise doubts about whether the Fed will continue cutting rates.” Such a scenario would challenge a stock market that’s already trading at historically high valuations. Much of the optimism for a continued rally into 2025 hinges on expectations of Fed rate cuts, which would lower borrowing costs and enhance the appeal of high valuations. Conversely, higher rates tend to reduce the present value of future earnings, putting pressure on elevated prices. A Look Back at History Investors wary of the Fed’s impact on markets might recall the dot-com bubble of the late 1990s. Nicholas Colas, co-founder of DataTrek Research, noted that the bubble burst in 2000 after the Fed raised interest rates to 6.5%. “Even a modest series of hikes sent a clear message that the Fed intended to cool the economy, which was enough to dampen investor enthusiasm,” Colas explained. This time, the situation is different but no less delicate. While DataTrek remains optimistic about equities, parallels to past Fed interventions are a reminder of how sensitive markets can be to changes in monetary policy. The Fed Walks a Tightrope Currently, markets are pricing in a 66% chance that the Fed will cut rates by 25 basis points next month, according to the CME FedWatch Tool. This follows cuts in September and earlier this month. However, sticky inflation and resilient economic growth have fueled speculation about whether the Fed might pause its rate-cutting cycle. Minutes from the Fed’s November meeting revealed a divided outlook among policymakers. Many expressed uncertainty about the neutral rate—the point at which monetary policy is neither restrictive nor stimulative. Steve Blitz, Chief U.S. Economist at TS Lombard, underscored the significance of the jobs report, saying, “The November payroll data could be pivotal for this data-driven Fed.” Momentum Meets Risk Despite lingering uncertainty, markets have been riding a wave of momentum. Last week, the S&P 500 notched its 53rd record close of the year, up 26.5% year-to-date. The Dow Jones Industrial Average briefly surpassed the 45,000 mark, while the Nasdaq Composite gained more than 6% in November. Meanwhile, the 10-year Treasury yield dropped to its lowest level since October, offering some relief to equity investors. However, soaring confidence in future stock gains could signal caution ahead. Economist Ed Yardeni of Yardeni Research observed that consumer confidence in higher stock prices over the next year recently hit an all-time high. “From a contrarian perspective, this suggests a pullback may be on the horizon,” Yardeni warned. The Bigger Picture Market moves are often more aligned with economic fundamentals than political shifts. Lauren Goodwin, Chief Market Strategist at New York Life Investments, explained, “Markets respond to real economic changes, not just politics. Durable trends come from broader economic forces.” While optimism over potential tax cuts and deregulation is buoying sentiment, November’s labor-market data could provide a clearer picture of whether those trends are sustainable. As Paul Christopher of Wells Fargo Investment Institute noted, “The Trump trade aligns with existing economic and inflation trends.” This week’s jobs report won’t just influence the Fed’s decision-making—it could also shape investor confidence as markets enter the final stretch of the year. Whether the data reinforces the current rally or signals caution, its impact is likely to be significant. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

According to Bank of America (BofA) Global Research, U.S. stocks typically perform well during Thanksgiving week, with even stronger gains observed in presidential election years. “Seasonality suggests that Thanksgiving week can be a strong week,” said Stephen Suttmeier, BofA’s technical research strategist, in a recent note. Historical data shows that since 1928, the S&P 500 has risen 60% of the time during Thanksgiving week, with an average gain of 0.28% and a median gain of 0.46%. In presidential election years, the index has performed even better, climbing 75% of the time with an average return of 0.88% and a median gain of 1.08%. While the S&P 500 often experiences a pullback the week after Thanksgiving—particularly in election years, when it has declined 67% of the time with an average loss of 1.12%—Suttmeier notes that these dips historically precede strong year-end rallies. From Thanksgiving through New Year’s Eve, the S&P 500 has posted gains 75% of the time in election years, with an average return of 1.38% and a median gain of 1.60%. The market’s momentum in 2024 reflects these trends. Year-to-date, the S&P 500 has surged 25.5%, according to FactSet. While historical data from Bespoke Investment Group shows that strong year-to-date gains can temper Thanksgiving week’s returns—bringing them closer to the long-term average—investors may still find opportunities in the anticipated post-holiday rally. As of Monday, the S&P 500 rose 0.3%, closing at 5,987.37, just shy of its record high of 6,001.35. The Dow Jones Industrial Average climbed 1% to a fresh all-time high, while the Nasdaq Composite added 0.3%. Despite a relatively light economic and earnings calendar this week, key data releases are expected on Wednesday ahead of the Thanksgiving holiday, followed by a shortened trading session on Friday. Given the market’s historical patterns, the Thanksgiving-to-year-end period remains a promising window for investors to consider. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Tariffs and Inflation: BNY Wealth CIO Says It’s ‘Far Too Early’ to Predict Significant Impact Inflation Concerns Resurface as Investors Eye Policy ShiftsU.S. financial markets are grappling with renewed inflation fears following President-elect Donald Trump’s victory, as investors weigh the potential impact of proposed policies like tax cuts and import tariffs. These measures, some argue, could exacerbate the fiscal deficit and fuel inflation. The 10-year Treasury yield has risen 14 basis points since Nov. 6, reflecting these concerns. However, markets have shown resilience: the S&P 500 has gained over 3%, the Dow Jones Industrial Average nearly 5%, and the Nasdaq Composite around 3%, according to FactSet. Yet, uncertainty lingers as investors try to decipher mixed signals from various asset classes. Oil and Gold Respond, but Inflation’s Role Remains CloudedOil and gold prices have surged recently, although analysts attribute much of the movement to geopolitical tensions rather than inflation fears. U.S. crude oil futures jumped 6.5% last week to settle at $71.24 a barrel, while gold, often seen as an inflation hedge, posted a 5% weekly gain, closing at $2,712.20 an ounce. Brian Szytel, co-CIO at the Bahnsen Group, suggested that Trump’s pro-energy policies could increase supply and weaken the traditional link between oil prices and inflation. Value, Growth, and Small Caps: Market Shifts in FocusIn periods of inflation, value stocks often outperform growth stocks, as seen during 2022’s inflation surge. The Russell 1000 Value Index outpaced its growth counterpart last year, and it rose 2.4% last week compared to the Russell 1000 Growth Index’s 1.7% gain. However, analysts like Szytel argue that value stocks are currently attractive more for their valuation dynamics than inflation concerns. Meanwhile, small-cap stocks, which typically benefit from reflation and economic growth, have outperformed in recent weeks. The Russell 2000 Index climbed 4.5% last week, supported by optimism around Trump’s tax-cut proposals and a potential resurgence in domestic manufacturing. Tariff Impact: Too Soon to Draw ConclusionsSinead Colton Grant, CIO at BNY Wealth, cautioned that it’s “far too early” to conclude that tariffs will lead to “significantly higher inflation.” She noted that market signals across asset classes remain mixed and suggested that policy measures are unlikely to exacerbate inflation significantly, given voters’ sensitivity to rising prices. Grant also pointed out that upcoming data, including Wednesday’s personal consumption expenditures price index, could shape the market narrative. A higher-than-expected reading may dampen sentiment and challenge the stock market’s year-end rally. Key Earnings Reports AheadAs the Thanksgiving holiday approaches, the earnings calendar includes major retailers like Best Buy, Macy’s, and Nordstrom, as well as tech giants like Dell and CrowdStrike. These results could provide fresh insights into consumer sentiment and corporate performance amid lingering inflationary concerns. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com