Financial Update: October 28, 2024
I hope your week is off to a great start! As we approach the end of the month and Halloween, the U.S. financial markets are in for quite a week. This week has it all — mega-cap tech earnings, economic data, and the final trading week before the election. Are we in for a trick or a treat?
U.S. stock market indexes were treated to a rather calm week last week. There was some divergence in focus with industrials losing ground, yet the Nasdaq composite made an all-time high.
Tallying major stock indexes last week, the S&P 500 declined by 0.96%, the Nasdaq 100 rose by 0.14%, and the Dow Jones Industrial Average was lower, as sector rotation was on display, ending the week lower by 2.68%.
Q3 Earnings Season
In what could be a tricky earnings season, there seems to be some divergence of opinion between analysts and CEOs regarding Q3 results.
According to data gathered by Bloomberg Intelligence, analysts are currently predicting a 4.2% rise in earnings for the S&P 500 for the third quarter. This projection marks a decline from an earlier forecast of a 7% rise made in mid-July.
Interestingly, the guidance issued by these companies indicates they expect a much more substantial increase in earnings, estimated at approximately 16%.
This contrast between analyst forecasts and company guidance highlights varying expectations for economic performance in the near term.
As of last Friday’s market close (10/25/24), 37% of the companies in the S&P 500 have reported their actual results for Q3 2024. Out of these companies, 75% have shown a positive earnings per share (EPS) surprise, while 59% showed a positive revenue surprise.
This Week: Some Mag 7 Earnings
The Magnificent Seven — Microsoft (MSFT), Meta Platforms (META), Amazon.com (AMZN), Apple (AAPL), NVIDIA (NVDA), Alphabet (GOOGL), and Tesla (TSLA) — will be key in this earnings week. Five companies are reporting: Alphabet on Tuesday, Meta and Microsoft on Wednesday, and Amazon and Apple on Thursday.
Tesla’s earnings last week exceeded expectations, while NVIDIA will report in late November.
As major contributors to earnings growth and a large part of the S&P 500’s market cap, their results are crucial for stock performance this week.
Treasury Yields Rise
While stocks traded mostly mixed last week, Treasury yields rose.
Ten-year note yields settled last week near 4.233%, rising by around 16.1 basis points. The move in tens last week marked the fifth week out of the last six with rising yields, making mortgages and the cost of money more expensive.
Investors are debating the future path of interest rate cuts and are questioning the inflation narrative — factors that could have influenced the move higher in interest rates last week.
Shorter duration Two-year note yields also rose last week, tacking on around 2.4 basis points – near 4.131%.
The 2/10 yield curve continued to be uninverted (normalized) last week, with ten-year yields higher than two-year yields.
Unemployment Claims Lower, Flash Data As Expected
Weekly new applications for unemployment claims came in lower than expected last week, coming in at 227,000 versus 241,000 expectations. On the flip side, however, continuing claims are at the highest level since 2021. So, it’s a mixed bag.
Flash manufacturing and services came in healthily last week, exceeding expectations and indicating a mostly strong economic backdrop.
“October’s flash US PMI survey signaled a further solid rise in business activity to mark a robust start to the fourth quarter. Growth was driven solely by the service sector, however, as manufacturing output contracted for a third month running. Meanwhile, employment fell slightly for a third successive month amid uncertainty ahead of the Presidential Election,” the official report states.
This Week: Trick or Treat?
Fan of Halloween and financial markets? If so, this is your week.
This week is chock full of all kinds of treats: earnings from mega-cap tech, the final trading week of what is known as the most volatile month of the year for stocks, Core Personal Consumption Expenditures (the Fed’s favorite inflation gauge) on Thursday, and nonfarm payrolls data to begin November on Friday.
Across the world, it is the UK Budget, and by the time you read this, there were the weekend elections in Japan. What more can a market lover ask for here?
Until next time, have a great week! As always, feel free to reply to this email or call me to discuss your strategy. I am always here as a resource for you.
Disclosure:
This material provided by Levitate. Levitate is not affiliated with Valmark Securities, Inc. and Valmark Advisers, Inc. Indices are unmanaged and do not incur fees, one cannot directly invest in an index. Diversification does not guarantee investment returns and does not eliminate the risk of loss. Past performance does not guarantee future results. The information provided has been derived from sources believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete analysis of the material discussed, nor does is constitute an offer or a solicitation of an offer to buy any securities, products or services mentioned.
Disclosure:
This material provided by Levitate. Levitate is not affiliated with Valmark Securities, Inc. and Valmark Advisers, Inc. Indices are unmanaged and do not incur fees, one cannot directly invest in an index. Diversification does not guarantee investment returns and does not eliminate the risk of loss. Past performance does not guarantee future results. The information provided has been derived from sources believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete analysis of the material discussed, nor does is constitute an offer or a solicitation of an offer to buy any securities, products or services mentioned.