Market Pulse with Dan Sheehan

Good morning investors,

Markets begin December with measured consolidation following November's extraordinary gains as investors prepare for a crucial week of economic data and Fed commentary. The combination of Friday's record highs and upcoming labor market indicators creates sophisticated positioning requirements amid evolving policy expectations.

November Performance

The past month demonstrated remarkable strength with the Dow advancing 7.5% and S&P 500 gaining 5.7%, marking their best monthly performances of 2024. Small caps particularly benefited from post-election optimism as the Russell 2000 surged over 10%. The Dow's brief venture above 45,000 Friday underscores sustained momentum even as valuations reach extended levels.

Market Framework

Pre-market activity suggests selective profit-taking with S&P 500 futures declining 0.13% and Nasdaq futures easing 0.17%. Treasury yields edge higher after reaching late October lows Friday, with the 10-year rising 1 basis point to 4.207% and 2-year advancing 2 basis points to 4.192%. This modest steepening warrants monitoring given potential trade policy implications.

Bitcoin's retreat toward $95,000 from Friday's $99,000 high reflects modest risk recalibration, though institutional flows continue suggesting sustained demand beyond speculative interest. The digital asset's correlation with traditional risk assets deserves attention heading into year-end positioning.

International Evolution

Asian markets demonstrated broad strength with Japan's Nikkei gaining 0.8% to 38,513.02 and Australia's ASX 200 reaching record close at 8,447.9. Hong Kong's Hang Seng advanced 0.65% while mainland China's CSI 300 rose 0.79% despite expanding U.S. semiconductor restrictions targeting 140 Chinese companies.

European indices face more meaningful pressure amid French political uncertainty, with CAC 40 declining 0.77% as the government confronts no-confidence motion over budget proposals. Germany's DAX eases 0.15% while UK's FTSE demonstrates relative resilience.

Economic Focus

This week's substantial calendar takes heightened significance ahead of December's Fed meeting, beginning with today's manufacturing readings:

Manufacturing PMI (9:45 AM ET): Prior 48.8

ISM Manufacturing (10:00 AM ET): Expected 47.5 vs 46.5 prior

Construction Spending (10:00 AM ET): Expected +0.1%

Later Week Highlights:

Corporate Evolution

Technology sector developments create meaningful framework implications as U.S. expands semiconductor restrictions. The targeting of equipment maker Naura Technology among 140 Chinese companies suggests accelerating supply chain reorganization.

Australia's proposed $33M fines for tech platforms suppressing competition demonstrates evolving regulatory framework beyond U.S. borders. Meanwhile, JPMorgan and Tesla's warrant dispute resolution removes meaningful overhang for both companies.

Supply chain dynamics warrant particular attention as UPS and FedEx project strong on-time holiday delivery performance amid moderating demand. This efficiency suggests meaningful margin potential despite volume pressures.

Strategic Outlook

Current market structure requires sophisticated discrimination following November's substantial gains. While economic data this week could influence December Fed meeting expectations, the combination of strong institutional flows and improving sentiment suggests sustained momentum potential.

The distinction between near-term consolidation and longer-term framework development grows increasingly important as markets process both technical extension and fundamental evolution. Careful attention to both opportunity and risk remains essential for long-term success.

As always, feel free to reach out with questions about positioning for these evolving market dynamics.

Dan Sheehan

[email protected]

This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.