- Big Bank Earnings: Major U.S. banks exceeded third-quarter profit expectations, driven by strength in asset and wealth management. However, many banks significantly increased provisions for potential credit losses, signaling caution about future economic conditions. The recent Fed rate cut is expected to help ease deposit costs, but its impact may not be fully felt until later.
- Earnings Outlook Contrast: CEOs and analysts are offering contrasting views on S&P 500 earnings, with analysts expecting 4.2% growth for Q3, while company guidance points to a stronger 16% increase. Despite analysts lowering forecasts, investor confidence remains high, fueled by the possibility of positive earnings surprises and efficiency gains in the face of economic uncertainty.
- Inflation and Jobless Claims Rise: U.S. inflation increased 0.2% in September, with the annual rate at 2.4%, slightly higher than forecast. Meanwhile, jobless claims hit a 14-month high, driven by factors like Hurricane Helene and the Boeing strike, raising concerns about potential softness in the labor market.
- Federal Deficit: The U.S. federal deficit for fiscal year 2024 reached $1.8 trillion, the third-largest on record, driven by rising interest on the public debt, which grew 34% to $950 billion. Despite a strong year for tax collections, with corporate taxes up 26% and overall federal tax revenue growing 11%, soaring interest expenses and persistent high spending contributed to the large deficit.
- Germany's Recession Outlook: Germany's GDP is now expected to decline by 0.2% in 2024, signaling a potential recession as companies and households remain cautious amid high interest rates and geopolitical uncertainties. The government forecasts a modest recovery in 2025, alongside proposed stimulus measures aimed at boosting economic growth and employment.
- Asian Markets Oppose: Emerging market stocks experienced record inflows, led by $39 billion into Chinese equities, with $30 billion from domestic investors and $9 billion from foreign investors. In contrast, Japanese stocks saw a significant weekly outflow of $9 billion, the largest in 20 years.
- Oil Prices Drop: U.S. crude futures fell over 4% after Israel informed the U.S. it plans to limit retaliatory strikes on Iran to military targets, alleviating fears of disruption to Iran's oil industry. Despite recent geopolitical concerns, market focus has shifted back to fundamentals, with expectations of an oil surplus in 2024.
- Google Embraces Nuclear Energy: Google has signed a deal with Kairos Power to use small nuclear reactors for powering its AI data centers, aiming to bring the first reactor online this decade and expand by 2035. As tech companies increasingly turn to nuclear energy for its reliability and low carbon emissions, this partnership highlights the growing trend of using nuclear power to meet the massive energy demands of AI-driven data centers.
- SpaceX Starship Milestone: SpaceX successfully launched its Starship vehicle and, for the first time, caught the Super Heavy booster with "chopstick" arms at the launch site, marking a significant step toward rapid reusability. This test, part of SpaceX's goal to make space travel more efficient, also featured Starship's upper stage completing a controlled splashdown in the Indian Ocean.
- EPS exceeded expectations by 0.9%, reporting $2.31 vs. $2.29 forecast
- Revenue fell short by 2.4%, reporting $23.32B vs. $23.9B forecast.
- EPS surpassed forecasts by 9.5%, reporting $4.37 vs. $3.99 forecast
- Revenue exceeded expectations by 2.9%, reporting $42.65B vs. $41.45B forecast.
- EPS surpassed expectations by 1.8%, reporting $7.15 vs. $7.02 forecast
- Revenue exceeded forecasts by 1.7%, reporting $100.82B vs. $99.14B forecast.
- EPS exceeded expectations by 5.5%, reporting $5.40 vs. $5.12 forecast
- Revenue surpassed forecasts by 0.5%, reporting $9.82B vs. $9.77B forecast.
- Consider putting an extra principal payment towards your mortgage each month or paying your mortgage biweekly to reduce your interest costs and loan term.
- Extra principal payments will allow your equity to build up quicker, which can be beneficial if you later decide to refinance or sell your property.
- Example:
- Before doing additional principal payments, be sure to consult with your lender to confirm that the extra payments are applied directly to the principal and not towards future payments or fees.
- Also check if your lender has any policies regarding extra payments, such as prepayment penalties or the way the payments are received.
- Review your employer benefits options for health insurance, retirement plans, HSAs, and FSAs as fall open enrollment is right around the corner for many employers.
In the next two weeks, markets will be closely watching economic data, including inflation and labor market reports, as investors assess the Federal Reserve's future rate path. Stock market volatility is expected to remain elevated with uncertainty around economic growth and geopolitical tensions. Additionally, the upcoming U.S. election is likely to contribute to heightened market sensitivity as investors gauge its potential impact on fiscal and regulatory policies.
