Happy Thanksgiving week! As we enter this festive period, financial markets are showing optimism. The prevailing sentiment is that the Federal Reserve may be concluding its cycle of interest rate hikes, a development that has spurred a rally in both stocks and bonds. Many see inflation falling back to the Fed's 2% target without a material upswing in unemployment and odds stand at 28% of a cut at the March 2024 meeting. However, it's worth considering that this tapering in inflation might be attributed to a decrease in consumer demand.

Turning our attention to the S&P 500 index, it has rebounded to near its August highs of around 4,500, a crucial resistance level. This resurgence witnessed over the past three weeks, has been driven by a decline in interest rates, leading to a broad-based rally. Particularly noteworthy has been the recovery in stocks that had previously seen the most significant declines this year – a trend dubbed as the "dash for trash." This trend will be closely monitored as we move into the new year, with market participants eager to see if these gains hold steady. A key event this week is Nvidia's earnings report. Given its significant weight of over 2% in the index, Nvidia's performance could disproportionately influence the S&P 500.

It is a slower news flow week given the holiday, yet many will be focused on the Fed Minutes. This data release will shed some light on the previous Fed meeting where Powell & Co. kept rates steady. Drilling deeper the minutes should have language that officials are seeing a cooling down in the labor market, justifying the pause.

Newton scores remain at average levels, even after the push higher in indexes last week. Under the surface, Technology is on top for the third week in a row while Health Care, Energy, Consumer Defensives, and Financials lag.