The Week In Review 10/9/2023
“Baseball is the only field of endeavor where a man can succeed three times out of ten and be considered a good performer.” – Ted Williams
Good Morning ,
October begins sloppy, and choppy…The S&P 500 (+0.5%) and Nasdaq Composite (+1.6%) registered gains while the Dow Jones Industrial Average (-0.2%) and Russell 2000 (-2.2%) declined.
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Mega cap performance offered support to the broader market last week, but much of the markets remained soft.
Eight of the 11 S&P 500 sectors closed in the red last week. The energy (-5.4%), consumer staples (-3.1%), and utilities (-2.9%) sectors saw the steepest declines while the heavily weighted information technology (+3.1%) and communication services (+2.9%) sectors closed with the biggest gains.
The energy sector fell alongside WTI crude oil futures, which declined 8.8% to $83.04/bbl. That weakness was partially attributed to concerns about weakening demand in a slower growth environment influenced by higher interest rates, but oil prices also had a big run coming into last week.
Treasury yields continued to move higher despite a growing sense that the bond and stock market are oversold in the short-term and due for a bounce. The 10-yr note yield jumped another 20 basis points last week to 4.78% and the 2-yr note yield rose two basis points to 5.06%.
The move in yields partially reflected a recalibration of rate hike expectations following Friday's stronger-than-expected September employment report. Nonfarm payrolls increased a much stronger than expected 336,000 in September (consensus 158,000), and that news was accompanied by upward revisions to July and August data that summed to 119,000 more jobs than previously thought. At the same time, average hourly earnings growth moderated to 4.2% year-over-year from 4.3% in August.
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Other notable data last week included the September ISM Services PMI, which showed a modest deceleration in the pace of expansion versus August, and the September ISM Manufacturing PMI, which showed a deceleration in the pace of contraction compared to August.
Last week there was also a cloud of political uncertainty hanging over the markets after the House voted 216-210 in an unprecedented action to remove Kevin McCarthy as Speaker of the House.
This could complicate the negotiations to avoid another government shutdown after November 17 since business in the House will be stalled until a new Speaker is elected.
Banks are closed today in observance of Columbus Day; the stock markets are open.
Have a wonderful week!
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