{"id":216001,"date":"2024-12-05T09:45:00","date_gmt":"2024-12-05T14:45:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/campus\/?p=216001"},"modified":"2025-03-21T14:59:42","modified_gmt":"2025-03-21T18:59:42","slug":"us-european-stocks-rise-despite-looming-risks","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/us-european-stocks-rise-despite-looming-risks\/","title":{"rendered":"US, European stocks rise despite looming risks"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\" id=\"h-key-takeaways\">Key takeaways<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-us-stocks\">US stocks<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Investors in US stocks are clearly focusing on positive catalysts such as the potential for significant deregulation under the incoming Trump administration.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-european-stocks\">European stocks<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">We also saw stocks in Europe ignore fears and perform well last week despite some challenging developments.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-justified-optimism\">Justified optimism<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">I think optimism in the face of challenges is often justified, especially when monetary policy is becoming supportive.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">US stocks continued to rally last week, including a strong showing from small caps,<sup><a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/us-european-stocks-rise-despite-looming-risks.html#1\">1<\/a><\/sup>&nbsp;despite growing worries from individual investors. So what\u2019s prompting stocks to climb the proverbial \u201cwall of worry?\u201d Many investors in US stocks are clearly focusing on positive catalysts such as the potential for significant deregulation and tax cuts under the incoming Trump administration, while ignoring risks such as the potential economic impact of tariffs and very restrictive immigration policies. In this article, I\u2019ll explain the risks, explore why I believe optimism is justified, and highlight some positive trends to watch around the world.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-bullish-sentiment-falls-while-bearish-sentiment-rises\"><strong>Bullish sentiment falls while bearish sentiment rises<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">First, let\u2019s get a sense of how high the wall of worry is. Here are the findings from the most recent weekly American Association of Individual Investors (AAII) Sentiment Survey published on Nov. 21:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Bullish sentiment<\/strong>, defined as expectations that stock prices will rise over the next six months, fell 8.6 percentage points to 41.3%.<sup><a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/us-european-stocks-rise-despite-looming-risks.html#2\">2<\/a><\/sup>\u00a0(That said, it remains higher than its historical average of 37.5%, marking the 54th time it has been above its historical average in the last 55 weeks).<\/li>\n\n\n\n<li><strong>Bearish sentiment<\/strong>, defined as expectations that stock prices will fall over the next six months, increased 4.9 percentage points to 33.2%. It\u2019s worth noting that bearish sentiment is now above its historical average for the first time in 10 weeks.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-high-valuations\"><strong>High valuations<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">I have also heard from many clients over the last year who are worried about high valuations. It\u2019s true that some stocks, especially US large-cap stocks, have very high price-to-earnings ratios and are arguably priced for perfection or near perfection. However, it\u2019s clear from the ongoing stock market rally that most investors are overlooking valuations and are continuing to invest.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-a-resurgence-of-inflation-may-be-the-biggest-risk-facing-the-market\"><strong>A resurgence of inflation may be the biggest risk facing the market<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">As I\u2019ve said before, when it comes to the two main policy risks of tariffs and immigration, immigration is the far greater economic concern for me because of already tight labor markets \u2014 especially in certain industries \u2014 that can drive up labor costs. And deportations would not be reversible like tariffs, which is a recipe for higher and sticky&nbsp;<a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/what-is-inflation-fed-measure.html\">inflation<\/a>. And so, unsurprisingly, I think the biggest risk going forward is the potential for a resurgence in inflation. That could further slow&nbsp;<a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/what-is-federal-reserve-inflation.html\">Federal Reserve<\/a>&nbsp;(Fed) easing \u2014 or even stop it.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As for me, I think the path of easing will be more gradual, but still significant. The Federal Open Market Committee meeting minutes released last week didn\u2019t alter my expectations for the Fed; they confirmed that the path of easing will be somewhat slower than expected a few months ago, but that the Fed remains data dependent. As I\u2019ve said before, I don\u2019t expect the Fed to cut in December. That is a view I\u2019ve held for a while, but it was confirmed by the minutes: \u201cupside risks to the inflation outlook were seen as little changed, while downside risks to employment and growth were seen as having decreased somewhat.\u201d<sup><a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/us-european-stocks-rise-despite-looming-risks.html#3\">3<\/a><\/sup>&nbsp;It was also confirmed by the most recent Personal Consumption Expenditures print. While it was in line with expectations, it remains elevated; not much disinflationary progress has been made recently. That suggests more caution for the Fed in the near term<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-bond-vigilantes-could-pose-risks-as-well\"><strong>Bond vigilantes could pose risks as well<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Another risk is the potential for bond vigilantism among investors who might sell their Treasury bonds in protest of government policies that grow the deficit. Such a sell-off would likely result in rising yields that could exert downward pressure on stocks.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, we actually saw a reversal of higher yields last week, driven largely by the nomination of Scott Bessent to be US Treasury Secretary. Bessent is perceived to be rational and moderate when it comes to tariffs. More importantly, Bessent is considered to be a fiscal conservative, which seems to be just what the US needs right now. Bessent has proposed a plan to reduce the federal budget deficit to 3% of gross domestic product (GDP) \u2014 a benchmark that the European Union is also using for its member nations. His nomination and the potential for more fiscal discipline was enough to reverse much of the \u201cyield climb\u201d that has been seen in the 10-year US Treasury yield since President-elect Trump began leading in betting odds well before the presidential election. The 10-year US Treasury yield fell from well above 4.4% to 4.175% last week<sup><a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/us-european-stocks-rise-despite-looming-risks.html#4\">4<\/a><\/sup>, which helps explain the recent wind beneath the wings of stocks \u2014 despite investor worries.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-european-stocks-have-also-been-climbing-a-wall-of-worry\"><strong>European stocks have also been climbing a wall of worry<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">We also saw stocks perform well in other parts of the world, again ignoring fears. European equities, as represented by the MSCI Europe Index, returned 1.8% last week despite some challenging developments.<sup><a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/us-european-stocks-rise-despite-looming-risks.html#5\">5<\/a><\/sup>&nbsp;Following is a recap of just a few of those recent developments:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The flash services and manufacturing\u00a0<a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/what-is-purchasing-managers-index-pmi.html\">Purchasing Managers\u2019 Index<\/a>\u00a0(PMI) readings for the euro area were disappointing, with both in contraction territory. Eurozone services PMI negatively surprised and fell into contraction territory at 49.2, a 10-month low, while eurozone manufacturing PMI fell to 45.2.<sup><a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/us-european-stocks-rise-despite-looming-risks.html#6\">6<\/a><\/sup>\u00a0Having said that, it\u2019s important to note that there were significant differences within the eurozone. Germany and France each saw output decrease, which is not surprising given the headwinds they face. However, the rest of the eurozone continued to see business activity increase.<\/li>\n\n\n\n<li>Eurozone Consumer Confidence (preliminary reading) decreased to -13.7 in November 2024, below its long-term average and worse than market expectations.<sup><a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/us-european-stocks-rise-despite-looming-risks.html#7\">7<\/a><\/sup>\u00a0This was the lowest reading since June. There was a material decline in consumers\u2019 assessment of the overall economy as well as their household financial outlook.<\/li>\n\n\n\n<li>The flash estimate on November euro area inflation was 2.3% year-over-year, up from 2.0% year-over-year in October, which exceeded the ECB\u2019s target inflation rate. However, core inflation was stable so it shouldn\u2019t slow down monetary policy easing.<sup><a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/us-european-stocks-rise-despite-looming-risks.html#8\">8<\/a><\/sup><\/li>\n\n\n\n<li>Germany retail sales fell 1.5% month-over-month for October, which was worse than expected.<sup><a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/us-european-stocks-rise-despite-looming-risks.html#9\">9<\/a><\/sup><\/li>\n\n\n\n<li>The unemployment rate for Germany for November was 6.1%, the same as October; this is the highest level since February 2021.<sup><a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/us-european-stocks-rise-despite-looming-risks.html#9\">9<\/a><\/sup><\/li>\n\n\n\n<li>The French 10-year government bond yield eclipsed that of the Greek 10-year bond yield for the first time last week, due to the perilous budget situation in France. France is under pressure by the EU to get its deficit down to 3% of GDP; the goal was to do that by 2027, although Prime Minister Michel Barnier had decided to delay reaching that goal to 2029 in order to more gradually ease into fiscal austerity. France is expected to have a budget deficit this year of 6.1% of GDP; Barnier\u2019s plan would lower the deficit to 5.1% of GDP in 2025 through a mix of spending cuts and tax increases, although he has received significant opposition. Far-right National Rally leader Marine le Pen announced last week she would vote \u201cno confidence\u201d and topple France\u2019s minority government unless changes are made to the country\u2019s budget bill \u2013 specifically around not increasing the electricity tax and increasing pension levels. This of course will make it much harder for France to meet EU fiscal targets after its budget had just been given the green light by the European Commission \u2013 and it could mean the prime minister\u2019s job will once again be vacant. The next several weeks will be a nail-biter, as the budget bill for next year must be passed by Dec. 21.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-supportive-monetary-policy-can-justify-stocks-climb\"><strong>Supportive monetary policy can justify stocks\u2019 climb<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">In short, I\u2019m happy to see markets climbing a wall of worry \u2014 I think optimism in the face of challenges is often justified, especially when monetary policy is becoming supportive. And I\u2019m happy to see the broadening in markets with the recent strong showing from small-caps. In my view, this is also justified given that we anticipate an economic re-acceleration in 2025.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-looking-beyond-the-wall-of-worry\"><strong>Looking beyond the wall of worry<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">I should add that not all developments are worrisome. There are good things happening as well:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>In a perfect illustration of the \u201cbad news is good news\u201d paradigm, expectations rose last week that the European Central Bank would ease more quickly than previously expected given weak economic data.<\/li>\n\n\n\n<li>Last week, Japan\u2019s government announced a $250 billion fiscal stimulus program (about 4% of GDP), which pushed up bond yields and expectations around the Bank of Japan\u2019s anticipated tightening path. That in turned strengthened the yen. This stimulus plan is a form of industrial policy not dissimilar to what we have seen from other developed countries, including the US, such as the CHIPS Act. It would support the artificial intelligence and semiconductor industries and would also provide cash subsidies for energy for lower-income households. While there is no guarantee this will pass the Diet, it is good news for the Japanese stock market and economy.<\/li>\n\n\n\n<li>The Japanese government also proposed a higher investment return target for the nation\u2019s largest pension fund, a move that is likely to result in increased purchases of stocks.<\/li>\n\n\n\n<li>China\u2019s manufacturing activity is on an upswing, with the Caixin Manufacturing PMI rising to 51.5 for November, well above expectations.<sup><a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/us-european-stocks-rise-despite-looming-risks.html#10\">10<\/a><\/sup>\u00a0This is a five-month high. Even more encouraging is that the new orders sub-index hit a 3.5 year high. This echoes improvement seen in China\u2019s official manufacturing PMI.<\/li>\n\n\n\n<li>The Canadian Federation of Independent Business (CFIB) released its November Business Barometer, a long-term index reflecting 12-month forward expectations for business performance in Canada. The Business Barometer rose to 59.7 in November 2024 from 55.8 in October, reaching its highest level since May 2022.<sup><a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/us-european-stocks-rise-despite-looming-risks.html#11\">11<\/a><\/sup>\u00a0This uptick is broad-based and reflects a general increase in optimism across most sectors.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-might-this-mean-for-investors\"><strong>What might this mean for investors?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">All this suggests to me that stocks are justified in climbing the wall of worry. However, I believe it could make sense to take profits and \u201cright size\u201d exposure to more expensive areas of the US stock market (large-cap growth, especially tech) while adding to exposure to US mid-caps and small caps, which sport lower valuations and have the potential to handily benefit from an economic re-acceleration next year.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I believe it could also be time to ensure adequate exposure to non-US stocks and fixed income. Volatility is low right now and we might be lulled into a false sense of security, but there will likely be hiccups and sell-offs in coming months, which makes a good argument for the importance of exposure to alternatives that have historically had lower correlations to equities; now might be a particularly attractive time to add exposure to real estate.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-giving-thanks\"><strong>Giving thanks<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Last Thursday was Thanksgiving in the US. While the Thanksgiving holiday might be American (and Canadian), gratitude is universal. And so it was a wonderful opportunity to spend time with my loved ones and reflect on what I\u2019m thankful for. Beyond my family (furry and non-furry), I\u2019m very grateful to do what I love every single day, and I try to never take that for granted. Part of why I love my job is that I have the privilege of working with so many brilliant and insightful colleagues who also happen to be kind and good people. I\u2019m especially grateful for the members of the Global Market Strategy Office, who make me smarter every day. And I\u2019m grateful for my long-serving (and long-suffering) editor who turns lemons into lemonade each week&nbsp;<em>(Editor\u2019s Note: No suffering at all!)<\/em>&nbsp;And I\u2019m incredibly grateful for you readers. I am humbled that you take time out of your busy week to read what I have to say.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-looking-ahead\"><strong>Looking ahead<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">This week will be an important one. I will be focused on the Job Openings and Labor Turnover Survey report and the November employment situation report in the US since the Fed has said it doesn\u2019t want to see a further deterioration in employment. I will also be following eurozone retail sales as well as the preliminary University of Michigan Survey of Consumers and the Fed\u2019s Beige Book, which is usually chock full of good anecdotal information.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-dates-to-watch\">Dates to watch<\/h4>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><th><strong>Date<\/strong><\/th><th><strong>Report<\/strong><\/th><th><strong>What it tells us<\/strong><\/th><\/tr><tr><td>Dec. 2<\/td><td>India Manufacturing Purchasing Managers\u2019 Index<\/td><td>Indicates the economic health of the manufacturing sector.<\/td><\/tr><tr><td>&nbsp;<\/td><td>Eurozone Unemployment<\/td><td>Indicates the health of the job market.<\/td><\/tr><tr><td>Dec. 3<\/td><td>US Job Openings and Labor Turnover Survey<\/td><td>Gathers data related to job openings, hires, and separations.<\/td><\/tr><tr><td>Dec. 4<\/td><td>Australia Gross Domestic Product<\/td><td>Measures a region\u2019s economic activity.<\/td><\/tr><tr><td>&nbsp;<\/td><td>Federal Reserve Beige Book<\/td><td>Gathers anecdotal information on current economic conditions in Federal Reserve districts.<\/td><\/tr><tr><td>Dec. 5<\/td><td>Eurozone Retail Sales<\/td><td>Indicates the health of the retail sector.<\/td><\/tr><tr><td>&nbsp;<\/td><td>Japan All Household Spending<\/td><td>Tracks the health of the consumer.<\/td><\/tr><tr><td>&nbsp;<\/td><td>Reserve Bank of India Monetary Policy Decision<\/td><td>Tracks the path of interest rates.<\/td><\/tr><tr><td>Dec. 6<\/td><td>US Jobs Report<\/td><td>Indicates the health of the job market.<\/td><\/tr><tr><td>&nbsp;<\/td><td>Canada Jobs Report<\/td><td>Indicates the health of the job market.<\/td><\/tr><tr><td>&nbsp;<\/td><td>University of Michigan Survey of Consumers<\/td><td>Provides indexes of consumer sentiment and inflation expectations.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">&#8212;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Originally Posted December 3, 2024<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.invesco.com\/us\/en\/insights\/us-european-stocks-rise-despite-looming-risks.html?utm_campaign=thirdparty&amp;utm_source=ibrokers&amp;utm_medium=referralference\">US, European stocks rise despite looming risks <\/a>by Invesco US<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Footnotes<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Source: Bloomberg, L.P. For the week ending Nov. 29, 2024, the price of the S&amp;P 500 Index was up 1.06% and the price of the Russell 2000 Index was up 1.17%.<\/li>\n\n\n\n<li>Source: AAII Sentiment Survey, \u201cOptimism Sinks,\u201d Nov. 21, 2024<\/li>\n\n\n\n<li>Source: Minutes of the Federal Open Market Committee, Nov. 6\u20137, 2024<\/li>\n\n\n\n<li>Source: Bloomberg, L.P., from Nov. 22 through Nov. 29<\/li>\n\n\n\n<li>Source: MSCI, as of Nov. 29, 2024<\/li>\n\n\n\n<li>Source: S&amp;P Global\/HCOB, as of Nov. 22, 2024\u00a0<\/li>\n\n\n\n<li>Source: European Commission, as of Nov. 21, 2024<\/li>\n\n\n\n<li>Source: Eurostat, Nov. 28, 2024<\/li>\n\n\n\n<li>Source: German Federal Statistical Office, Nov. 29, 2024<\/li>\n\n\n\n<li>Source: S&amp;P Global, Caixin, as of Dec. 1, 2024<\/li>\n\n\n\n<li>Source: CFIB, Nov. 29, 2024<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Important information<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">NA4066758<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Image: Jordi Salas \/ Getty<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">All investing involves risk, including the risk of loss.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Past performance does not guarantee future results.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Investments cannot be made directly in an index.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Investments in real estate-related instruments may be affected by economic, legal, or environmental factors that affect property values, rents or occupancies of real estate. Real estate companies, including REITs or similar structures, tend to be small and mid-cap companies and their shares may be more volatile and less liquid.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In general, stock values fluctuate, sometimes widely, in response to activities specific to the company as well as general market, economic and political conditions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Stocks of small- and mid-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Investments in companies located or operating in Greater China are subject to the following risks: nationalization, expropriation, or confiscation of property, difficulty in obtaining and\/or enforcing judgments, alteration or discontinuation of economic reforms, military conflicts, and China\u2019s dependency on the economies of other Asian countries, many of which are developing countries.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Fixed income investments are subject to credit risk of the issuer and the effects of changing interest rates. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. An issuer may be unable to meet interest and\/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer\u2019s credit rating.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Alternative products typically hold more non-traditional investments and employ more complex trading strategies, including hedging and leveraging through derivatives, short selling and opportunistic strategies that change with market conditions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Investors considering alternatives should be aware of their unique characteristics and additional risks from the strategies they use. Like all investments, performance will fluctuate. You can lose money.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The American Association of Individual Investors\u2019 AAII Sentiment Survey offers insight into the opinions of individual investors by asking them their thoughts on where the market is heading in the next six months.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Summary of Commentary on Current Economic Conditions by Federal Reserve District (the Beige Book) is published eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its district, and the Beige Book summarizes this information by district and sector.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Caixin Purchasing Managers\u2019 Index (PMI) for China is considered an indicator of economic health for the Chinese manufacturing sector. It is based on survey responses from senior purchasing executives.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Russell 2000\u00ae Index is an unmanaged index considered representative of the US small-cap stock market. The Russell 2000 Index is a trademark\/service mark of the Frank Russell Co. Russell\u00ae is a trademark of the Frank Russell Co.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The S&amp;P 500\u00ae Index is an unmanaged index considered representative of the US stock market.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Bond vigilantes is a name given to bond investors who sell bonds in protest against a monetary or fiscal policy they fear is inflationary.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Correlation is the degree to which two investments have historically moved in relation to each other.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Disinflation, a slowing in the rate of price inflation, describes instances when the inflation rate has reduced marginally over the short term.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Monetary easing refers to the lowering of interest rates and deposit ratios by central banks.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Employment Situation Report is released by the US Bureau of Labor Statistics to monitor labor market data on a monthly basis.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The European Commission is the European Union\u2019s executive arm. It takes&nbsp;decisions on the EU\u2019s political and strategic direction.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Eurozone Manufacturing PMI\u00ae (Purchasing Managers\u2019 Index\u00ae) is produced by IHS Markit based on original survey data collected from a representative panel of around 3,000 manufacturing firms. National data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland, and Greece.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Eurozone Services PMI (Purchasing Managers\u2019 Index) is produced by IHS Markit and is based on original survey data collected from a representative panel of around 2,000 private service sector firms. National data are included for Germany, France, Italy, Spain, and the Republic of Ireland.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Federal Open Market Committee (FOMC) is a committee of the Federal Reserve Board that meets regularly to set monetary policy, including the interest rates that are charged to banks.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A flash estimate is an early estimate for an economic data point.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Gross domestic product (GDP) is a broad indicator of a region\u2019s economic activity, measuring the monetary value of all the finished goods and services produced in that region over a specified period of time.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Inflation is the rate at which the general price level for goods and services is increasing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Job Openings and Labor Turnover Survey (JOLTS) from the US Bureau of Labor Statistics produces data on job openings, hires, and separations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The MSCI Europe Index captures large- and mid-cap representation across a universe of developed market countries in Europe.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Personal consumption expenditures (PCE), or the PCE Index, measures&nbsp;price changes&nbsp;in consumer goods and services. Expenditures included in&nbsp;the index are&nbsp;actual US household expenditures. Core PCE excludes food and energy prices.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The price-to-earnings (P\/E) ratio measures a stock\u2019s valuation by dividing its share price by its earnings per share.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Purchasing Managers\u2019 Indexes (PMI) are based on monthly surveys of companies worldwide and gauge business conditions within the manufacturing and services sectors.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Survey of Consumers is a monthly telephone survey conducted by the University of Michigan that provides indexes of consumer sentiment and inflation expectations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Tightening monetary policy includes actions by a central bank to curb inflation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The opinions referenced above are those of the author as of&nbsp;<strong>Dec. 2, 2024<\/strong>. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions; there can be no assurance that actual results will not differ materially from expectations.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key takeaways US stocks Investors in US stocks are clearly focusing on positive catalysts such as the potential for significant deregulation under the incoming Trump administration. European stocks We also saw stocks in Europe ignore fears and perform well last week despite some challenging developments. Justified optimism I think optimism in the face of challenges [&hellip;]<\/p>\n","protected":false},"author":27,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[18,6,8,9,26,3],"tags":[313,51,1685,3598,44,52],"contributors-categories":[13606],"class_list":["post-216001","post","type-post","status-publish","format-standard","category-macro","category-north-america","category-region","category-securities","category-text-articles","category-traders-insight","tag-europe","tag-global","tag-macro","tag-market-outlook","tag-stocks","tag-us","contributors-categories-invesco-us"],"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v28.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>US, European stocks rise despite looming risks<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.interactivebrokers.com\/campus\/wp-json\/wp\/v2\/posts\/216001\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"US, European stocks rise despite looming risks | IBKR Campus US\" \/>\n<meta property=\"og:description\" content=\"Key takeaways US stocks Investors in US stocks are clearly focusing on positive catalysts such as the potential for significant deregulation under the incoming Trump administration. European stocks We also saw stocks in Europe ignore fears and perform well last week despite some challenging developments. Justified optimism I think optimism in the face of challenges [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/us-european-stocks-rise-despite-looming-risks\/\" \/>\n<meta property=\"og:site_name\" content=\"IBKR Campus US\" \/>\n<meta property=\"article:published_time\" content=\"2024-12-05T14:45:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-03-21T18:59:42+00:00\" \/>\n<meta name=\"author\" content=\"Kristina Hooper\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Kristina Hooper\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"15 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\n\t    \"@context\": \"https:\\\/\\\/schema.org\",\n\t    \"@graph\": [\n\t   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