Market Commentary Archives

by Jared Plotz, Director of Research

Markets continued to trend upward, advancing for the sixth consecutive week. During the week, the S&P 500 was up +0.85% and the Nasdaq +0.80%. On Monday the S&P 500 was up +0.77%, Tuesday -0.76%, Wednesday +0.47%, Thursday -0.02%, and Friday +0.40%. The 10-Year Treasury, a rate indicator, closed the week at 4.08%, unchanged from last week. The 6-month US Treasury, a favorite of our US Treasury strategy, remained roughly flat at 4.46%.

Economic data was largely favorable this week. September retail sales came in better than expected, rising 0.4% sequentially from August. Initial, and continuing, claims for unemployment were both lower than forecast. Homebuilder sentiment improved, and housing starts were slightly ahead of expectations on Friday.

Additional banks released Third Quarter results this week. Bank of America, US Bank, and PNC showed stronger profits from loans, with relatively stable credit trends. Goldman Sachs and Morgan Stanley demonstrated continued momentum in investment banking and asset management fees. Trading results amongst the big investment banks have been the best on record. Banks on the whole appear to have more than adequate reserves for loan losses today, and thus improving profits on each loan as the Fed begins to cut short-term rates may boost bank earnings going forward.

Unfortunately, United Healthcare, one of our larger equity holdings, fell on Tuesday. It reported solid revenue and earnings numbers, but margins disappointed and the company had to slightly lower its full-year guidance. Taiwan Semiconductor – not a portfolio holding, but the largest contract manufacturer of Nvidia’s advanced chips – jumped 10% on Thursday when it revealed sales growth of 40% and earnings growth over 50%. The company also said that it expects Fourth Quarter sales to sequentially grow twice as fast as analysts were anticipating. Demand for AI chips remains very robust, and we think this may bode well for Nvidia’s report next month.

Next week, earnings season continues with reports by General Motors, Boston Scientific, Vertiv, and Tesla. New and existing home sales for September will be released mid-week, and then durable goods orders will come on Friday.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

by Jared Plotz, Director of Research

Equity markets managed to advance for a fifth straight week despite a rise in interest rates and further weather disasters. Investors are comforted by the durable economy alongside ample capacity for the Federal Reserve to reduce rates as needed. Further upside, however, is constrained by near-term political uncertainty and geopolitical risks that lend to a “wait and see” approach.

The S&P 500 rose +1.11% this week – hitting a fresh record on Friday – while the Nasdaq climbed +1.13%. The technology sector resumed some of its leadership as favorite Nvidia rose 8%. Meanwhile, defensive investments like utilities, healthcare, and gold lagged behind. On Monday, the S&P 500 dropped -0.96%, Tuesday it rallied +0.97%, Wednesday +0.71%, Thursday -0.21%, and Friday +0.61%. The 10-Year Treasury rose +11 bps to 4.08%. The 6-Month Treasury, utilized in our US Treasury strategy, ended the week flat at 4.45%.

Thursday’s report of September CPI came in “hotter” than expected. Prices rose +2.4% versus a year ago, while core inflation (ex-food/energy) rose +3.3%. We saw a sizable jump in initial weekly jobless claims, likely impacted by Hurricane Helene and last week’s port worker strike. On Friday, inflation’s sister report, the PPI, was in line with expectations but cooler than its counterpart. All-in-all, the data further eased pressure on the Fed to cut rates heavily before year-end.

Hurricane Milton made landfall near Sarasota, Florida on Wednesday evening. Widespread flooding and wind damage resulted in as many as three million people losing power. Though the overall economic damage may turn out better than the worst fears, losses will pressure the state’s already challenged property insurance market. We may also see further near-term impacts on labor markets.

JPMorgan and Wells Fargo kicked off bank earnings on Friday. Earnings were stronger than analysts predicted; investment banking results were robust; and loan credit trends were positive. Both stocks rose 4-5% on the news, while the broader bank index increased 3%. In technology news, Taiwan Semiconductor – the largest contract manufacturer of Nvidia’s advanced chips – said that their revenue rose +40% y/y in September, an improvement versus August and implying an acceleration in its Q3 growth rate versus Q2. Taiwan Semiconductor will share full Q3 numbers on October 17^th.

Next week, Third Quarter earnings season will start hitting full stride. Additional banks will report results, along with healthcare and transportation companies. Retail sales for September will be released on Thursday, along with a number of housing metrics towards the end of the week.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

by Jared Plotz, Director of Research

Equity markets eked out a fourth straight weekly gain despite additional uncertainties posed by tensions in the Middle East and a short-lived worker strike at major US ports. The S&P 500 rose +0.22% on the week and the Nasdaq +0.10%. On Monday, the S&P 500 gained +0.42%, Tuesday -0.93%, Wednesday +0.01%, Thursday -0.17%, and Friday +0.90%. The strongest performing sectors were Energy and Communication Services, while the weakest were Materials and Real Estate. Energy stocks were boosted as oil prices spiked due to conflict in the Middle East. Risk remains of a further supply squeeze in oil, with resulting higher prices at the gas pump.

Friday’s jobs report showed a big surprise, with nonfarm payrolls rising by 254,000 in September and both July/August numbers being revised higher. Expectations had been for gains of just 140,000-150,000. Unemployment ticked back down to 4.1% from 4.2% last month, while hourly earnings rose 4.0% from a year ago. Layoffs remain low and employers are seeking a greater number of workers. The release did not show a material impact from Hurricane Helene, which could negatively impact next month’s report. Overall, investors took solace in a view that the economy is chugging along better, even if stronger employment may lessen pressure on the Fed to cut rates fast.

45,000 US dockworkers at 36 East and Gulf coast ports went on strike Tuesday through Thursday. Their union had been seeking substantial wage increases and a ban on the introduction of additional automation processes. It was the first walkout by the employee group since 1977. These ports facilitate as much as 60% of US trade flow and JP Morgan estimated the economic costs to be roughly $4 billion per day. Fortunately, by Friday the two sides had reached a tentative agreement to avert a larger supply chain disruption through January 15. Port employers will increase wages by 62% over six years, while the issue of automation remains unresolved.

The 10-Year Treasury rose +21 bps to 3.97% this week. The 6-Month Treasury, utilized in our US Treasury strategy, ended up at 4.45%. Despite the rise in interest rates, our Preferred securities performed well, largely bucking the broader fixed income decline this week.

Next week, earnings season kicks off on Friday, with the first of the big banks releasing Q3 earnings results. We will also get September’s inflation metrics for CPI (on Thursday) and PPI (on Friday). Both metrics, along with employment data, will feed into the Fed’s next decision in November.

We send our sincere thoughts to our clients recently impacted by Hurricane Helene in the Southeast.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

by Jared Plotz, Director of Research

The world’s largest central banks are not only finally moving, but suddenly going faster than markets had anticipated. The US Fed cut interest rates by a half percentage point last week, while South Africa cut for the first time in four years. The week before, the European Central Bank cut their policy rate for the second time this year, as did Denmark. This week, China cut on Tuesday, Sweden on Wednesday, and Mexico on Thursday. China not only rolled out a comprehensive set of rate cuts, but also reduced the required down payment on second homes to stimulate the key housing markets there. Lower central bank policy rates tend to accelerate global economic growth, which has been slowing since 2021.

The S&P 500 reached a new record high on Thursday. Despite some mixed economic data points – including a big drop in September consumer confidence – the S&P 500 rose +0.62% on the week and the Nasdaq +0.95%. On Monday the S&P 500 was +0.28%, Tuesday +0.25%, Wednesday -0.19%, Thursday +0.40%, and Friday -0.13%. While it’s a common investor adage to “not fight the Fed” when they are easing rates, this time around we are starting at much richer valuation multiples (the aggregate S&P 500 trades nearly 22x its forward expected earnings versus an average of 14x during the start of the last eight cutting cycles). Thus, we are cautiously optimistic, but equity markets may be choppy over the next month as we begin Q3 earnings season for companies. Not to mention, the election is less than 30 trading days away.

In fixed income land, Preferred securities continue to move favorably following the Fed’s rate move, even amidst some steepening in the interest rate curve (long-term rates moving up, short-term down). The 10-Year Treasury, a rate indicator, was up +2bps to 3.76%. The 6-month US Treasury fell -6bps to end the week at 4.38%. The tailwind we described last week continues to blow us along, and we look forward to sharing final Q3 performance numbers soon.

Next Tuesday will bring the August Jobs Openings report (JOLTS), with September nonfarm payrolls out on Friday. Markets will be on the watch given the slight uptick in the unemployment rate over the last year (4.2% in August, still low given historical averages). With the Federal Reserve’s recent shift towards rate cuts, the path forward in rate easing will continue to rely on both inflation and employment data, with the Fed trying to balance its dual mandate (keeping prices under control and aiming for maximum employment).

Have a great start to your autumn season this weekend!

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.