Weekly Market Recap

U.S. stocks continued their upward momentum, with the S&P 500, Dow, and NASDAQ each gaining over 1% for the week. This marks the fifth consecutive week of growth, extending the market's recovery from September's rocky start. The S&P 500 and Dow pushed their record highs even further, while the NASDAQ ended less than 2% below its all-time peak.

Yields on the Rise

For the fourth week in a row, the yield on the 10-year U.S. Treasury note climbed, closing at 4.08% on Friday—up from 3.98% the previous week. This increase followed a monthly inflation report, prompting investors to rethink the pace of future rate cuts. The yield now stands significantly higher than its recent low of 3.62% in mid-September.

Earnings Season Takes Off

Earnings season kicked into gear on Friday as two major U.S. banks reported their third-quarter results, with both seeing their shares rise. Analysts are projecting a 4.1% average earnings increase for S&P 500 companies this quarter, according to FactSet, signaling steady growth as we move deeper into earnings reports.

Inflation’s Grip Tightens

September’s Consumer Price Index (CPI) reading came in slightly above expectations, with prices rising at a 2.4% annual rate—just below August’s 2.5% but higher than the 2.3% economists had predicted. Core inflation, which excludes volatile food and energy prices, increased to 3.3%, up from 3.2% in August, adding further uncertainty to the future pace of interest rate cuts.

Fed's Rate Debate

Minutes from the U.S. Federal Reserve’s September meeting revealed a robust debate over the size of the recent rate cut. While most officials ultimately supported the half-percentage point reduction, some favored a smaller quarter-point cut. In the end, only one member voted against the decision, highlighting the diversity of opinion on the board.

Consumer Sentiment Slips

U.S. consumer sentiment took an unexpected dip for the first time in three months. The University of Michigan’s Consumer Sentiment Index came in at 68.9 for October, down from 70.1 in September, surprising many economists who had predicted a slight uptick.

Stock Buybacks on the Rise

Companies in the S&P 500 increased their stock buybacks, spending nearly $878 billion in the 12 months ending in June 2024—an 8% rise from the previous year, according to S&P Dow Jones Indices. However, second-quarter buyback spending was down slightly, by 0.4%, compared to the first quarter.

Retail Sales Report on the Horizon

This Thursday, the U.S. retail sales report will provide further insight into consumer spending trends. Last month, the Commerce Department reported a modest 0.1% increase in August sales, with July’s figures revised upward to a 1.1% gain. This upcoming report will show whether the positive trend carried into September.

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