Weekly Market Mornings (November 17) FED’s Caution Triggers Stock Market Sell-Off

Last Week’s Reports

Economic Reports

In October, Consumer Price Index (CPI) increased by 0.2%.Over the past year, CPI went up by 2.6%. Excluding food and energy, prices rose by 3.3%. Energy prices fell by 4.9%, while food prices went up by 2.1%.

2.6% inflation is above the Federal Reserve’s target of 2%. This has led to some speculation that the Fed might pause its interest rate cuts in December if inflation continues to rise unexpectedly.

In October, Producer Price Index (PPI) rose by 0.2%. Over the past year, PPI index went up by 2.4%. The core PPI, which excludes food, energy, and trade services, increased by 0.3% in October and 3.5% over the year. These modest rises in producer prices might lead the Federal Reserve to hold off on cutting interest rates.

Federal Reserve Chair Jerome Powell spoke in Dallas, emphasizing that the economy’s strength allows for cautious decision-making on interest rates. Powell mentioned it’s too early to predict the impact of President-elect Trump’s policies, including new tariffs aimed at boosting domestic production. 

U.S. retail sales for October went up by 0.4% month-over-month, surpassing the expected 0.3% increase. The largest sales boosts were in electronics and appliance stores and auto dealers . However, sales dropped in miscellaneous store retailers, furniture stores.

US industrial production dropped by 0.3% in October, as expected. A major aircraft producer’s strike cut growth in September and October. Hurricanes Milton and Helene further reduced October’s growth. Manufacturing output, which accounts for 78% of total production, fell by 0.5%.

Earning Reports

Cisco

Cisco (CSCO) Q1 earnings report for fiscal year 2025. The company reported revenue of $13.8 billion, beating estimates and reaching the high end of their guidance range. 

Also, Cisco posted non-GAAP EPS of $0.91. A notable 20% yearly increase in product orders indicated normalizing demand. 

Cisco also declared a quarterly dividend of $0.40 per share, to be paid on January 22, 2025. 

CEO Chuck Robbins stated the company is off to a strong start in fiscal 2025, with significant customer investment in critical infrastructure for AI. 

Walt Disney

Walt Disney (DIS) Q4 2024 earnings report showed positive results with revenue of $22.6 billion, slightly above the forecast. Adjusted earnings per share (EPS) were $1.14, beating estimates. 

The entertainment segment saw significant growth, with operating income reaching $1.1 billion, driven by successful films like Pixar’s Inside Out 2 and Marvel’s Deadpool & Wolverine. 

A major highlight was the streaming services, which saw a combined operating income of $321 million and 4.4 million new Disney+ subscribers, bringing the total to over 122.7 million. 

However, the Parks, Experiences, and Consumer Products segment experienced a 6% decline in operating income to $1.66 billion due to increased costs and competition in international parks. 

Overall, Disney’s strong performance in entertainment and streaming helped it exceed expectations and boost investor confidence.

DIS is currently near a resistance zone around 117. There is a support around 110. However, if the overbought condition persists, the next resistance zone might be around 124.

Applied Materials

Applied Materials Inc. (AMAT) reported its Q4 and fiscal year 2024 results, showing a 5% yearly revenue increase to $7.05 billion, with non-GAAP EPS rising 9% to $2.32, despite a 12% drop in GAAP EPS to $2.09. 

For the full fiscal year, revenue grew 2%, with GAAP EPS up 6% and non-GAAP EPS up 7%. The company achieved strong operating income and cash flow, with significant shareholder returns through share repurchases and dividends. 

CEO Gary Dickerson highlighted the company’s technology leadership and execution, which drove record performance and positioned them well for AI and energy-efficient computing advancements.

Alibaba

Alibaba (BABA) Q2 2025 earnings report showed a 5% year-over-year increase in revenue to RMB 236,503 million, though it fell below estimates. 

Income from operations also rose by 5% to RMB 35,246 million, driven by a decrease in non-cash share-based compensation expense, offset by a decline in adjusted EBITA. 

Net income surged by 63% to RMB 43,874 million, thanks to changes in equity investments, decreased impairment, and increased income from operations. 

Non-GAAP diluted EPS fell by 4% to RMB 15.06. 

Meanwhile, net cash from operating activities decreased by 36%, and free cash flow dropped by 70%, primarily due to investments in Alibaba Cloud infrastructure and refunds to Tmall merchants after canceling the annual service fee.

BABA is currently in a descending channel, with a support zone around 86.  The higher resistance zone is around 95, and the lower support zone is around 80.

Indices

Indices’ Weekly Performance:

Wall Street ended lower as the post-election rally lost steam. The S&P 500 dropped 2%, the Dow fell by 1.24%, and the Nasdaq lost 3.42%. Indices reversing the post-election rally driven by optimism surrounding President-elect Trump’s policies.

Traders reacted to Fed Chair Jerome Powell’s hawkish remarks on interest rates, citing the economy’s strength, a resilient labor market, and persistent inflation, which led to reduced expectations of rate cuts. The chances of a 25-basis-point rate cut at the Fed’s December meeting were 58.4% on Friday, down from 72.2% the day before and 85.5% a month ago.

The SPX is currently trading between two black fan lines, and there’s a hidden divergence between the price and the RSI, indicating a potential price increase. This bullish signal suggests that the SPX could rise to around 5970, and possibly retest its all-time high of 6015. However, if the price continues to decline, it may find support at the lower black fan line around 5785.

Stocks

Stock Market Sector’s Weekly Performance:

Source: Finviz

Last week’s sector performance:

• Financial Sector (+0.92%): This sector saw a positive performance, likely due to gaining on strong client asset growth in October.
• Real Estate Sector (-2.43%): The real estate sector experienced a decline, potentially due to high interest rates impacting mortgage rates and housing demand.
• Technology Sector (-3.09%): The technology sector saw significant losses, with major companies like Nvidia, Amazon, Meta, and Alphabet booking losses.
• Basic Materials Sector (-4.86%): This sector saw a substantial decline, which could be due to falling commodity prices.
• Healthcare Sector (-5.98%): The healthcare sector experienced the largest decline, potentially due to regulatory concerns. Pharmaceutical stocks also struggled after news that Trump might appoint  Robert F. Kennedy Jr. to head the Department of Health and Human Services, causing declines in stocks like Amgen and Moderna.

Stock Market Weekly Performance:

Source: Finviz

Stocks faced their largest weekly drop in two months. This was influenced by economic data and statements from Federal Reserve officials indicating a slower pace of interest-rate cuts. Fed Chair Jerome Powell noted that the central bank wasn’t in a hurry to lower rates.

NVIDIA (NVDA) has been named the top large-cap, with its price target raised to $175. Meanwhile, TSMC (TSM) has been ordered by the U.S. to suspend AI chip shipments to China, as reported by Reuters. Coinbase (COIN) shares are up in response to Bitcoin’s price surge, and Apple (AAPL) is reportedly close to launching wall-mounted displays for home control and video calls. 

In other news, Amazon (AMZN) is planning to discontinue Freevee. Visa (V) reported that the European Commission plans an additional impact assessment of the IFR, potentially leading to further limits on interchange rates and broader regulatory scope.

Top Gainers in S&P 500

• Walt Disney Company (DIS): Surge 16.22% due to strong quarterly earnings report and positive news on new content releases boosted investor confidence.
• Palantir Technologies Inc. (PLTR): Surge 12.64% after announcing its move from the NYSE to Nasdaq.
• Charles Schwab Corporation (SCHW): Surge 9.12% due to total client assets reaching $9.85 trillion in October, a 29% increase compared to the previous year.
• Tyson Foods, Inc. (TSN): Surge 7.94% due to  posted splendid fourth-quarter fiscal 2024 results as the top and bottom lines increased year over year and beat the Estimate.
• Wells Fargo & Company (WFC): Surge 6.14%. After Donald Trump’s election win, Wells Fargo has surged as investors expect favorable policies for major banks.

Commodity

Weekly Performance of Gold, Silver, WTI and Brent Oil:

Source: Finviz

Gold (XAUUSD) has had a challenging time in November, losing over 8% and seeing intensified selloffs after Donald Trump’s presidential election victory. Investors are currently in a risk-taking mode due to Trump’s agenda promoting economic growth, lower taxes, and higher tariffs, with Republican control in Congress supporting these measures. 

The XAUUSD price is currently in a downtrend, with a support zone around 2540. The price is expected to range between this support zone and the resistance zone around 2605. If the support at 2540 is broken, the next support level could be around 2480. However, if the price manages to rise to 2605, it could test the upper black line around 2645.

Crude oil and gasoline prices saw a weekly loss of over 4%, hitting a 2-week low. This decline was driven by weak demand from China and a slump in equity markets, which has negatively impacted confidence in the economic outlook and energy demand. China’s oil refiners processed 4.6% less crude in October compared to last year, and the ongoing economic slowdown in China is adding to the worries.

Forex

Weekly Performance of Major Foreign Exchange Pairs:

Bond yields and the dollar have surged due to growth prospects and concerns that Trump’s policies might reignite inflation after the pandemic. Tariffs could increase government borrowing, further inflating the fiscal deficit and potentially causing the Fed to change its monetary policy course.

DXY: The dollar index was traded around a one-year high against a basket of currencies at 107, set for its best performance since September.

USDJPY: The pair was set for a weekly gain against the yen, traded above 156 yen for the first time since July last week. 

EURUSD: The euro was headed for the second straight week of losses, reaching its lowest level since October 2023. It was last up at $1.053. 

GBP/USD: The pair was on track for its steepest weekly fall since January 2023, at roughly 2.4%. The pound showed little reaction to data showing Britain’s economy contracted unexpectedly in September and growth slowed to a crawl over the third quarter.

Crypto

Crypto Market Weekly Performance:

Source: quantifycrypto

The cryptocurrency market cap reached approximately $3.05 trillion over the past week, with an increase of nearly $400 billion. This growth was driven by strong performances from major coins like Bitcoin, Ripple, and Dogecoin, among others.

Bitcoin (BTC) surged to around $90,000, showing a robust weekly gain of 19%, hitting $93,000 at its peak. This impressive run-up led some investors to take profits.

As you can see below, BTC has formed a cup pattern which makes huge profit targets.

Dogecoin, a favorite among retail traders and Elon Musk, surged following President-elect Donald Trump’s announcement. Trump revealed that Musk and Republican candidate Vivek Ramaswamy will lead the newly formed Department of Government Efficiency (DOGE). This news propelled Dogecoin above 40 cents, boasting weekly gains of 79%.

As we can see in the DOGEUSDT’s chart, after an upward rally last week, the price is currently ranging between two black lines. If it breaks upward through the descending black line, it could rise, with Fibonacci levels around 0.43 and 0.52 acting as resistance. However, if the price breaks downward through the horizontal black line, it could fall to around 0.30, with lower Fibonacci levels acting as support.

Next Week’s Outlook

Economic Events 

It will be a quiet week in the US with a focus on manufacturing and services PMI data which shows a slight improvement in manufacturing and faster growth in services. Also, housing updates like building permits, housing starts, and existing home sales will be released.

Key events include speeches by Federal Reserve officials and ECB President Christine Lagarde, and interest rate decisions from China. Inflation data will be important for Canada, the UK and Japan.

Earning Events

On the corporate side, major companies like Nvidia (NVDA), Walmart (WMT), Lowe’s (LOW), TJX Companies (TJX), Palo Alto Networks (PANW), Intuit (INTU), PDD Holdings (PDD), and Deere & Company (DE) will release their quarterly results.