Fall is upon us (finally!) and the spooky season is in full swing! We have a jam packed weekend with the Inspirada Fall Festival, soccer and tennis for the boys, and we have the pleasure of attending a charity fundraiser for The Animal Foundation at a client's ranch! How are you spending the last weeeknd of October?
And now onto the weekly recap:
It was a tough week for stocks. At the start of the week, the S&P 500 slipped below its 200-day moving average. By the end of the week, the S&P 500 settled 10.3% lower than the July 31 closing high (i.e. a technical correction) and tested support near the 4,100 level.
Many stocks participated in a broad retreat. The Invesco S&P 500 Equal Weight ETF (RSP) and the market-cap weighted S&P 500 each fell 2.5% this week. Only one of the 11 S&P 500 sectors logged a gain -- utilities (+1.2%) -- while the communication services (-6.3%) and energy (-6.2%) sectors saw the largest declines.
Weakness in the communication services sector was driven by Alphabet (GOOG), which logged a 9.8% decline on the week after an earnings report that contained some relatively disappointing growth for its cloud business, and Meta Platforms (META), which fell 3.9% following its earnings report. Microsoft (MSFT) and Amazon.com (AMZN) were met with positive reactions after reporting quarterly results.
Participants were also digesting a slate of mostly better-than-expected earnings results from blue chip names. Verizon (VZ), Coca-Cola (KO), Dow (DOW), RTX (RTX), General Electric (GE), and 3M (MMM) were among the standouts in that respect.
Geopolitical angst contributed to the overall negative bias throughout the week, but tensions peaked on Friday following reports that the US carried out airstrikes against Iranian backed targets in Syria. Separate reports indicated that Israel is expanding ground operations in Gaza. Participants learned about those developments right before the weekend when market's are closed for trading and investors can't react in real-time.
There was a heavy news flow this week in addition to the aforementioned headlines and earnings news. The headlines included Ford (F) and the UAW reaching a tentative agreement, the ECB leaving its corridor of key interest rates unchanged following ten consecutive rate increases, and a batch of economic data.
The economic calendar was highlighted by a whopping 4.9% real GDP growth in the third quarter and a September Personal Income and Spending report that failed to show a strong trend of disinflation. Those reports reflect ongoing strength in the economy and inflation that looks somewhat sticky, which is not likely to persuade the Fed to cut rates anytime soon.
Treasuries were better behaved this week, but that did not help stocks much. The 2-yr note yield declined six basis points to 5.03% and the 10-yr note yield fell seven basis points to 4.85%.
In other news, Rep. Mike Johnson (R-LA) was elected Speaker of the House after receiving unanimous Republican support.
| INDEX | STARTED WEEK | ENDED WEEK | CHANGE | % CHANGE | YTD % |
|---|---|---|---|---|---|
| DJIA | 33127.20 | 32417.50 | -709.70 | -2.1 | -2.2 |
| Nasdaq | 12983.80 | 12643.00 | -340.80 | -2.6 | 20.8 |
| S&P 500 | 4224.16 | 4117.37 | -106.79 | -2.5 | 7.2 |
| Russell 2000 | 1680.79 | 1636.94 | -43.85 | -2.6 | -7.1 |
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The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.
The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. The Russell 2000 Index tracks the performance of approximately 2,000 publicly traded small-cap companies in the United States. It is not possible to invest directly in an index.
The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (bps). One hundred basis points equals one percent.
Oil prices are represented by West Texas Intermediate (WTI) crude oil.
The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.