Edward Jones Market Insights: Bond Yields, NVIDIA Earnings, and Fed Rate Expectations

As of November 27, 2024, Edward Jones has provided key insights into the current market landscape, highlighting several critical trends and expectations. Bond yields have seen a modest decline, breaking the recent upward trend. The 10-year Treasury yield stands at 4.39%, reflecting reduced expectations for Federal Reserve (Fed) interest-rate cuts. This shift is attributed to the Fed’s dual mandates of maximum employment and stable prices returning to better balance, as the labor market normalizes and inflation gradually moderates.

The focus is also on corporate earnings, particularly with NVIDIA set to release its third-quarter earnings results. Estimates suggest earnings per share of $0.75 for NVIDIA, a leader in artificial intelligence. So far, the earnings season has been strong, with 92% of companies having reported and 74% beating analyst estimates. Earnings growth is broad, with seven of the 11 sectors delivering higher earnings, although sectors like energy, industrials, materials, and utilities are forecast to have lower earnings.

Jerome Powell‘s recent comments have also influenced market expectations. Powell indicated that the Fed is in no rush to cut interest rates, leading to a pullback in stocks and lower expectations for a rate cut next month. Despite this, analysts believe there is scope for rates to decline further next year, albeit at a slower pace, targeting a range of 3.5% to 4.0% rather than the previously expected 3.0% to 3.5%.

In addition, jobless claims have declined to 217,000, below expectations, reflecting a resilient labor market that is gradually normalizing. This trend suggests that employers are pulling back on hiring but not resorting to significant layoffs, which should support continued consumer spending into the holiday season.