US stocks record their fourth consecutive weekly rise!

US stock indices achieved strong weekly gains during trading in the week ending November 24, for the fourth week in a row, supported by growing market expectations regarding the end of the US monetary tightening cycle, in addition to the rise in some shares of a number of companies listed on the US stock market.

The most important factors affecting the performance of US stocks this week

Risk appetite in the US stock market rebounded strongly this week, as the index stabilized VIX The volatility performance of the US stock market is at its lowest levels since January 2020, and fell by more than 2% this week, reflecting the recovery of investors’ appetite for risk in the stock market.

This recovery was due to many factors, most notably the increasing market expectations regarding the end of the US interest rate hike cycle, as well as the rise in the shares of a number of major companies listed on US stock indices. In the following lines, it can be clarified how the performance of US stocks was affected by these factors:

First: Global stock markets are optimistic about the end of the monetary tightening cycle

Some economic developments that occurred in the US stock market this week have strengthened investor optimism about the US Federal Reserve ending its cycle of raising interest rates and reaching the final interest rate. Therefore, the next step will revolve around when to make the first cut in US interest rates.

In this regard, the data issued in the last week revealed that the manufacturing sector entered the contraction zone, recording about 49.4 points in October, which is less than the record level of 50 points, worse than market expectations, which suggested that the index would decline to 49.9 points, noting that the previous reading of the Purchasing Managers’ Index Manufacturing has stabilized at the level of 50 points, which has negative effects on American economic growth.

At the same time, the durable goods orders index contracted by 5.4% on a monthly basis, which is much worse than expectations that indicated a contraction of the index by only 3.2%, and it is also worse than the previous reading, which recorded a growth of 4.6%, which may lead to… To reduce inflation in the country in the coming period.

In light of these negative data, the US Federal Reserve may not raise the interest rate additionally during its upcoming meetings and keep it at the current level of 5.50%, as a result of the damage to the country’s manufacturing conditions and the possibility that inflation will continue to decline, which has strengthened the upward momentum in the performance of US stocks this week. Especially since the markets now see a 40% chance that the US Federal Reserve will cut interest rates at its May 2024 meeting, according to the Federal Interest Rate Tracking Tool issued by the Federal Reserve Group. CME.

The results of the US Federal Reserve meeting in November were also characterized by a very cautious tone regarding another interest rate hike, as the minutes of the last policy committee meeting indicated that there would be no further increases unless progress against curbing inflation falters, according to what was reported by Reuters news agency.

Second: The rise in the shares of some major companies listed on standard American stock indices

Some stocks listed on the US stock market witnessed many developments that led to their stocks rising at a strong pace, thereby enhancing the weekly US stock profits. The most notable of them can be discussed below:

Vista Outdoor (VSTO.N): The shares of the American design and manufacturing company recorded weekly gains of more than 4%, after the Czech arms manufacturer advanced Colt CZ Group With a merger offer worth approximately $1.7 billion, which may reflect positively on the company’s profits in the future.

IRobot (IRBT.O)The American technology company’s stock jumped by about 36% during this week’s trading, after reports indicated that Amazon had obtained European Union approval for its acquisition of the technology company for a value of up to $1.4 billion, which could lead to an increase in any robot’s profits and revenues in the coming period.

Xpeng Inc: The shares of the Chinese company listed on the US stock market achieved weekly profits of more than 10%, after the Volkswagen automaker announced its intention to develop a new platform for electric cars for beginners in China, which will design electric cars in accordance with the tastes of consumers in China in terms of the battery and the electric motor.

How was the weekly performance of US stocks affected by these developments?

As a result of the mentioned positive factors, the weekly profits of the index were estimated S&P 500 By about 1%, or the index’s gains increased by approximately 45 points, as the index recorded Dow Jones The industrial sector gained profits amounting to about 442 points, or 1.27%, and also, the gains of the index amounted to Nasdaq 100 The weekly rate rose about 0.91%, meaning it rose by 144 points during the trading week ending.