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Weekly Market Update for October 11, 2024
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 17th.
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.
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