Weekly Market Recap – October 27, 2023
Despite a strong quarterly GDP report and earnings season, U.S. stock indexes struggled to gain momentum, with the S&P 500, NASDAQ, and Dow all experiencing declines of over 2% for the week. This marked the sixth negative week out of the past eight for the S&P 500.
The NASDAQ faced a significant setback, with a 2% decline on Wednesday, pushing it more than 10% below its recent high from July 19, officially entering correction territory. On Friday, the S&P 500 also joined this correction territory as it fell over 10% below its peak from July 31, reaching its lowest level since May.
The U.S. economy continued to demonstrate resilience despite recession concerns, with GDP expanding at a robust 4.9% annual rate in the third quarter, surpassing consensus expectations of approximately 4.7%. Consumer spending remained robust, and this performance represented an acceleration from the 2.1% pace observed in the second quarter.
As earnings season approached its midpoint, companies within the S&P 500 were on track to report a seventh consecutive quarter of declining profit margins. FactSet data from Tuesday indicated that the average net profit margin stood at 11.6%, down from 11.9% in the same quarter a year earlier when margins had peaked at 13.0% during the second quarter of 2021.
The Russell 2000 Index, a U.S. small-cap stock benchmark, retreated on Friday to its lowest level in almost three years, dating back to November 2020. Since July 31, the index had declined by over 18%, and year-to-date, it was down by nearly 6%.
Amid recent bond market volatility, government bonds displayed relative stability, with yields on 2-year, 10-year, and 30-year bonds all experiencing slight declines for the week. Yields for each maturity hovered around 5.00%, indicating a flattening of the yield curve that had been inverted since July 2022, when the 2-year yield had surpassed that of the 10-year Treasury.
Looking ahead, the upcoming week promises more quarterly earnings reports, a U.S. Federal Reserve policy meeting concluding on Wednesday, and a monthly jobs report on Friday. The Fed is widely expected to maintain unchanged interest rates, and the jobs report will shed light on how October’s job growth compares to September’s larger-than-expected surge of 336,000 jobs.
Major U.S. Economic Reports
| Report | Period | Actual | Previous |
| S&P flash U.S. services PMI | Oct | 50.9 | 50.1 |
| S&P flash U.S. manufacturing PMI | Oct | 50.0 | 49.8 |
| New home sales | Sep | 759,000 | 676,000 |
| GDP | Q3 | 4.9% | 2.1% |
| Initial jobless claims | Oct 21 | 210,000 | 200,000 |
| Durable-goods orders | Sep | 4.7% | -0.1% |
| Durable-goods minus transportation | Sep | 0.5% | 0.4% |
| Advanced U.S. trade balance in goods | Sep | $85.8B | $84.6B |
| Advanced retail inventories | Sep | 0.9% | 1.1% |
| Advanced wholesale inventories | Sep | 0.0% | -0.1% |
| Pending home sales | Sep | 1.1% | -7.1% |
| Personal income | Sep | 0.3% | 0.4% |
| Personal spending | Sep | 0.7% | 0.4% |
| PCE index | Sep | 0.4% | 0.4% |
| Core PCE index | Sep | 0.3% | 0.1% |
| PCE (year-over-year) | 3.4% | 3.4% | |
| Core PCE (year-over-year) | 3.7% | 3.8% | |
| Consumer sentiment (final) | Oct | 63.8 | 63.0 |
Closing Prices for the Week
| Contract | Close |
|---|---|
| Dow Jones Industrials Average | 32,417.59 |
| Nasdaq Composite | 12,643.01 |
| S&P 500 Index | 4,117.37 |
| CBOE Volatility Index | 21.27 |
| S&P GSCI | 591.41 |
| U.S. Dollar Index | 106.559 |
| 10-Year T-Note (Dec ’23) | 106-135 |
| Crude Oil WTI (Dec ’23) | 85.54 |
| Natural Gas (Dec ’23) | 3.483 |
| Gold (Dec ’23) | 1,998.5 |
| Silver (Dec ’23) | 22.887 |
| Corn (Dec ’23) | 480-6 |
| Wheat (Dec ’23) | 575-4 |
| Soybean (Jan ’24) | 1319-4 |
| Coffee (Dec ’23) | 160.95 |
| Sugar #11 (Mar ’24) | 27.34 |
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