Weekly Market Report: November 1st, 2024
The last week of October packed in a good deal of market impactful news flow with a heavy calendar of corporate earnings and economic reports combined with the home stretch of the U.S. election cycle. The S&P 500 closed down 1.4%, a second consecutive down week, while developed (-0.63%) and emerging (-1.4%) international markets both lost ground as well. Treasuries were down again as interest rates continued to grind higher, pressing the 10yr yield up to 4.37%. Oil traded back down below $70, taking the commodity complex down approximately 2% on the week.
Market Anecdotes
- While the soft landing/no landing bullish narrative is still intact, risk appetites have been tempered the past couple of weeks thanks to the backdrop of rising bond yields and election uncertainty.
- Seventy percent of S&P 500 companies have reported earnings with results somewhat mixed overall. Blended earnings growth stands at 5.1% with beat rates and margins at 75% and 4.6% respectively. Revenue growth is at 5.2%.
- The Fed members were quiet last week in anticipation of this week’s FOMC meeting where markets are pricing a 99% probability of a 25-bps rate cut.
- With U.S. elections looming, BCA forecasters are leaning (55%) toward a Trump win with “Red Sweep” odds increasing to 47% and “Blue Gridlock” odds at 53%. There are several higher conviction investment implications to consider.
- China’s stimulus details were leaked last week at CNY 10t bond issuance over three years, 60% to boost local government balance sheets and 40% to buy raw land and housing. Meanwhile, anti-corruption crackdowns are rising.
Economic Release Highlights
- PCE inflation saw YoY headline (2.1% vs 2.1%) and core (2.7 vs 2.6%) both generally inline with forecasts. MoM headline (0.2%) and core (0.3%) both came in right at the spot forecast.
- Personal income growth of 0.3% increased from August’s 0.2% but came in slightly below the 0.4% estimate while Personal Consumption Expenditures of 0.5% beat the 0.4% estimate.
- October payrolls missed sharply with only 12,000 reported jobs, well below the spot forecast of 125,000 and range (57,000 – 180,000). The unemployment rate stayed at 4.1%. Average hourly earnings were generally in line with estimates at 0.4% MoM and 4% YoY.
- The Employment Cost Index (ECI) for Q3 rose 0.8%, slightly below consensus estimate of 1% but within the forecast range (0.7% to 1.0%). YoY ECI rose 3.9%, less than the 4.1% forecast.
- The JOLT Survey for September registered 7.443M job openings, well under the spot consensus of 7.900M and the forecast range of 7.8M to 8.0M.
- The initial 3Q U.S. GDP estimate came in slightly below forecast (2.8% vs 3.0%) while PCE exceeded (3.7% vs 3.0%) and came in above the high end of the forecast range of 2.0%-3.6%.
- The October ISM Manufacturing Index registered 46.5, below the consensus forecast of 47.6 while the final PMI Manufacturing index was revised up from 47.3 to 48.5.
- The Consumer Confidence Index in October jumped from 98.7 to 108.7, well above the spot forecast of 99.1 and consensus range of 97.7 to 100.5.
- Pending Home Sales jumped 7.4% MoM, well above the 1.0% expectation with the index climbing from 70.6 to 75.8.
- The Case-Shiller Home Price Index rose 0.4% MoM in August, up 5.2% YoY.
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