FOMC Rate Expectations & Earnings Strength Highlight Cautious Bull Run

Market Overview - The market is experiencing a five-session winning streak, indicating a healthy snapback rally, with a focus on whether this trend will continue or if volatility will return [1] - There is an improvement in market breadth, with cyclical sectors like financials and materials performing well, suggesting a broader rally beyond just technology stocks [2][3] Sector Performance - Semiconductors have risen by 8% from the previous week, alongside small-cap stocks, indicating a flow of capital into these sectors [3] - Approximately 40% of companies in the Russell 2000 index are not profitable, but expectations of rate cuts make these small-cap companies more attractive in the short term [5] Economic Indicators - Consumer sentiment and confidence are low, yet Thanksgiving Day spending increased by 5.3% according to Adobe Analytics, highlighting a mixed economic outlook [6] - The Federal Reserve's rate cut cycle is supporting equities, despite ongoing inflation concerns at around 3% [6] Earnings and Market Sentiment - The recent earnings season has shown strong results, with an 83% beat rate in earnings per share and over 60% in revenue beats, leading to high expectations for future earnings [8][9] - Retail investors have been active in buying dips, indicating a shift in market dynamics where retail trading is becoming more influential [12] Upcoming Data and Events - Key economic data to be released next week includes ISM manufacturing and services indices, Challenger job cuts, and PCE inflation data, which will be critical for market direction [13][14] - Notable earnings reports from large-cap companies like Marvel and CrowdStrike are expected, which could significantly impact market movements [15]