The Week in Review
"Talent is never enough. With few exceptions the best players are the hardest workers." – Magic Johnson
Good Morning ,
The stock market faced some selling pressure last week after six straight weeks of gains for the S&P 500. The Nasdaq logged its 7th consecutive week of gains!
The previous Friday's close had the S&P 500 and Dow Jones Industrial Average at record highs, so normal consolidation was part of the story last week.
The S&P 500 closed 1.0% lower last week and the Dow Jones Industrial Average sank 2.7%.
The profit-taking activity was fueled by rising market rates. The 10-yr Treasury yield settled 16 basis points higher last week at 4.23% and the 2-yr yield settled 15 basis points higher last week at 4.10%.
Last week's selling in the Treasury market expanded the 2s10s spread by a basis point to 13 bps.
The Nasdaq Composite managed to settle 0.2% higher for the week, benefitting from buying activity in mega caps and semiconductor shares.
The PHLX Semiconductor Index eked out a 0.1% gain.
Some of the buying in mega cap shares was related to the huge jump in Tesla following impressive Q3 earnings and 2025 vehicle growth forecast.
Other names that reported earnings included blue chip companies like Verizon, 3M, GE Aerospace, Lockheed Martin, General Motors, IBM, and Honeywell.
Earnings are strong… according to FactSet, 37% of the S&P 500 has reported and 75% of the reporting companies have beaten consensus EPS expectations. 59% have surpassed consensus sales expectations.
Where last week was light, this week will be very eventful. Earnings season will continue with roughly one-third of S&P 500 companies reporting. We will hear from Ford, Alphabet, Visa, McDonald’s, Pfizer, Microsoft, Meta, Amazon, Exxon, Chevron, and Apple to name a few.
Economic reports will also be featured events. We will receive Q3’s preliminary GDP report on Wednesday, September’s PCE report on Thursday, and October’s jobs report on Friday.
There will also likely be more investor angst following two major events next week: the Presidential election and the Fed’s FOMC meeting. We expect a ¼ cut on the Fed Funds rate, right after the Election.
We are expecting some added volatility over the coming weeks. Which could provide an opportunity before the end of the year. Volatility can work both ways.
Be safe and watch out for all the little goblins…
Trick or Treat!
