November's Stock Gains : A Bear Market Rally or The Start of a Sustained Upswing?

Sentiment was buoyed last week after Federal Reserve Chair Jerome Powell hinted the US central bank may now be finished with the most aggressive tightening cycle in four decades. Investor hopes for a soft economic landing saw the S&P 500 and the Nasdaq 100 indexes rise around 6%, while 10-year Treasury yields hit a one-month low last Friday, dropped more than 26 basis points as of Nov.3, 2023.

Still, concerns remain about the impact of higher-for-longer interest rates on demand, with companies flagging worries over the looming threat of an economic slowdown this earnings season.

Several analysts have warned that the current rebound in the US stock market looks more like a bear market rally without technical and fundamental support. In addition, the oversupply of US Treasury bonds and the unsustainability of the fiscal framework may continue to trigger market sell-offs of US bonds.