Last update: 10:58 am EST
Shares are in the red so far in today's trading as Moody's downgrade continues to weigh on the market (see below). However, as the year draws to a close, Wall Street is approaching a crucial period, traditionally marked by stronger performance in cyclical sectors.
This idea comes from Ned Davis Research, which highlights November as the launching pad for a bullish phase in which cyclical stocks typically outperform their defensive counterparts. It is a trend observed for numerous years, indicating a change in market dynamics that favors the most economically sensitive industries.
In response to this seasonal trend, Ned Davis Research has adjusted its sector strategy, placing greater emphasis on cyclicals. The company has improved communication services (XLC) to an overweight position, indicating a bullish outlook, while downgrading Healthcare (XLV) to Underweight.
This strategic reallocation reflects an anticipation of the potential outperformance of cyclical sectors in the coming months, especially in the context of a year-end rally. Sectors such as Technology (XLK) and Discretionary Consumption (xly) would benefit significantly, in contrast to the underperformance expected for traditionally defensive sectors such as consumer staples (XLP), public services (XLU), and Health Care.
Last update: 9:30 am EST
Stocks opened lower in Monday morning trading, with the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) were down 0.37%, 0.29%, and 0.16%, respectively, as of 9:30 a.m. EST on November 13.
First Posted: 3:41 am EST
US stock futures were in the red early Monday as Moody's downgraded its US credit rating outlook to Negative from Stable, citing large fiscal deficits and a decline in debt affordability. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) were down 0.37%, 0.30%, and 0.23%, respectively, as of 3:38 a.m. EST on November 13.
Moody's explained that given high interest rates and the absence of effective fiscal policy measures to reduce public spending or increase revenues, it expects the country's fiscal deficits to remain high, significantly impacting debt affordability. Moody's, which announced the downgrade on Friday, also highlighted the continued political polarization in the US Congress. It's worth noting that Moody's maintained the U.S. long-term and senior unsecured issuer ratings at Aaa.
Arriving to key gains this weekmajor retailers including Home Depot (High Definition), Aim (TGT), Walmart (WMT), TJX Companies (TJX) and BJ's Wholesale Club (bj), they plan to announce their quarterly results. Additionally, networking company Cisco (CSCO), cybersecurity company Palo Alto (PANW), and Chinese tech giants Alibaba (Slime) and JD.com (J.D.) will also announce their quarterly performance.
Main economic communications Those scheduled for this week include the October Consumer Price Index (CPI) report on Tuesday and the Producer Price Index (PPI) on Wednesday, the October retail sales report on Wednesday, industrial production data from last month on Thursday and the October housing start report on Friday.
Elsewhere, European indices started the week on a positive note, with traders expecting key inputs from talks between US President Joe Biden and Chinese President Xi Jinping at the APEC summit.
Asia-Pacific markets finished mixed on Monday
Major Asia-Pacific indices finished mixed on Monday, ahead of the long-awaited talks between the United States and China.
Hong Kong's Hang Seng Index and China's Shanghai Composite and Shenzhen Component Indices closed up 1.30%, 0.25% and 0.10%, respectively.
Meanwhile, the Japanese Nikkei rose 0.05%, while the Topix was virtually flat at the end of today's regular trading session. In Australia, the S&P/ASX 200 index fell 0.40%.
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