I hope everyone had a great weekend!
Markets appear poised for a bounce back this morning following a volatile week after the midterm elections. As we were reminded last week, market momentum can move in both directions, with a significant rally on Wednesday followed by a sharp reversal on Thursday.
Ultimately, I believe investors are anticipating greater congressional opposition to further escalation in the Iran conflict, which was reflected in last week's decline in oil prices. That trend is continuing this morning as diplomatic efforts to de-escalate tensions between the U.S. and Iran remain ongoing.
Additionally, Friday's stronger than expected October jobs report increased expectations that the Federal Reserve may implement another rate hike next month. Investors will be closely watching tomorrow's October CPI report and Friday's PPI report for further insight into the direction of inflation and the potential implications for Fed policy. The recent decline in oil prices could provide some relief in future inflation readings.
I continue to believe the underlying economy is positioned for a meaningful breakout should we see a durable resolution with Iran. In the meantime, the market broadening we have experienced is likely to continue as capital rotates into more value oriented sectors of the market.
As I have mentioned over the past several weeks, I view these periods of near term volatility as buying opportunities for long term investors heading into 2027.
Please don't hesitate to reach out with any questions or comments.
Attached is this week's Market Strategy Radar Screen Report from John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management.
Have a great week!