Weekly Market Recap – October 20, 2023
After experiencing fractional gains in the preceding two weeks, the S&P 500 recorded a decline of over 2%, marking its fifth negative result in the past seven weeks. The NASDAQ and the Dow also posted weekly declines as investors turned their attention to earnings reports and the volatility in the bond market.
Following a modest recovery in the prior week, government bond prices resumed their recent decline, causing the yield on the 10-year U.S. Treasury to briefly reach 5.00% on Thursday, the highest level since 2007. Although the 10-year yield dropped back below this threshold by Friday, the yields of 2-year and 30-year Treasuries closed the week around 5.08%.
Expectations for earnings season were dampened slightly as the results from a second week of quarterly reports were released. By the end of the week, it was anticipated that third-quarter net income would decline by 0.4% compared to the same period the previous year. This assessment was based on the combined results of S&P 500 companies that had already reported, along with projections for those yet to report. In the previous week, analysts had predicted a growth rate of 0.4%, as per FactSet data.
On Thursday afternoon, bond yields increased while stocks declined following a speech by Jerome Powell, the U.S. Federal Reserve chair. Powell indicated that the central bank might maintain unchanged interest rates at its next policy meeting ending on November 1. However, he also cautioned that inflation remained elevated and suggested that additional rate hikes were still possible if economic data continued to surpass expectations.
The unexpectedly strong performance in the latest monthly U.S. retail sales report provided further evidence of the resilience in consumer spending. Sales rose by 0.7% in September compared to the previous month, surpassing the expectations of most economists. Additionally, data for August was revised higher to show a 0.8% increase in sales.
Amid rising geopolitical tensions, the price of gold surged more than 3% during the week, reaching its highest level in five months. Gold futures on Friday were trading just below $2,000 per ounce, up from a recent low of $1,835 on October 6.
China, the world’s second-largest economy, exceeded the expectations of most economists in the third quarter. China reported that its GDP grew at an annual rate of 4.9% compared to the same quarter of the previous year. On a quarterly basis, GDP expanded by 1.3%, marking an acceleration from the 0.5% growth rate in the second quarter.
On Thursday, the U.S. government is set to release its initial estimate of third-quarter economic growth, with the majority of economists anticipating a solidly positive GDP growth figure. This comes in contrast to earlier predictions that the economy might be on the verge of a recession. The upcoming report follows a government revision of its second-quarter GDP estimate to an annual growth rate of 2.1%, down from 2.2% in the first quarter.
Major U.S. Economic Reports
|Empire State manufacturing survey||Oct||-4.6||1.9|
|U.S. retail sales||Sep||0.7%||0.8%|
|Retail sales minus autos||Sep||0.6%||0.6%|
|Home builder confidence index||Oct||40||44|
|Housing starts||Sep||1.36 million||1.27 million|
|Building permits||Sep||1.47 million||1.54 million|
|Initial jobless claims||Oct 14||198,000||211,000|
|Philadelphia Fed manufacturing survey||Oct||-5||-14|
|Existing home sales||Sep||3.96 million||4.04 million|
|U.S. leading economic indicators||Sep||-0.7%||-0.5%|
Closing Prices for the Week
|Dow Jones Industrials Average||33,127.28|
|S&P 500 Index||4,224.16|
|CBOE Volatility Index||21.71|
|U.S. Dollar Index||106.163|
|10-Year T-Note (Dec ’23)||106-000|
|Crude Oil WTI (Dec ’23)||88.08|
|Natural Gas (Dec ’23)||3.258|
|Gold (Dec ’23)||1,994.4|
|Silver (Dec ’23)||23.504|
|Corn (Dec ’23)||495-4|
|Wheat (Dec ’23)||586-0|
|Soybean (Nov ’23)||1302-2|
|Coffee (Dec ’23)||165.25|
|Sugar #11 (Mar ’24)||26.85|
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