Weekly Market Recap – October 6, 2023
The S&P 500 managed to break a four-week streak of losses, posting a marginal gain. Meanwhile, the Dow saw a slight decline, and the NASDAQ surged by nearly 2%. However, this upward movement was not without its challenges, as shifting expectations in the lead-up to Friday’s monthly U.S. employment report created turbulence in the markets.
The continued resilience of the U.S. labor market has put a damper on near-term recession concerns. In September, the economy added a substantial 336,000 jobs, marking the largest increase in eight months and roughly double the number anticipated by most economists. Furthermore, previous estimates of job growth in recent months were revised upward, and the unemployment rate for September held steady at 3.8%.
Friday’s robust jobs report triggered a surge in bond yields, with the yield on the 10-year U.S. Treasury reaching its highest level since 2007, closing at around 4.79%, up from 3.30% just six months earlier. In fact, the 30-year Treasury’s yield briefly surpassed 5.00% before settling below that mark.
The upward trajectory of bond yields reflects growing market expectations that the U.S. Federal Reserve might delay its transition to a rate-cutting stance, following a series of rate hikes since early 2022. Market indicators suggest a consensus is forming that the Fed may postpone rate cuts until July 2024.
As we approach earnings season, set to begin late this week with major banks reporting third-quarter results, expectations are somewhat subdued. As of Friday, analysts surveyed by FactSet were projecting an average earnings decline of 0.3% for S&P 500 companies compared to the same period last year. If this decline materializes, it would mark the fourth consecutive quarter of shrinking earnings.
Concerns about reduced global demand for oil weighed on oil prices, causing U.S. crude to plummet to around $83 per barrel, representing a nearly 9% weekly drop, the sharpest decline since March 2023. Just a few days earlier, on September 27, oil had reached a year-to-date high of $94 per barrel.
The price of gold experienced a decline, reaching its lowest level in seven months on Thursday, with gold futures trading at approximately $1,816 per ounce. This marked a decrease from a recent peak of about $1,945 on September 20.
A forthcoming Consumer Price Index (CPI) report scheduled for release on Thursday will provide insight into whether the mixed trends in inflation persisted into September. The most recent CPI report for August revealed a 0.6% month-to-month increase in inflation. Much of this increase was driven by higher energy prices, while core inflation, excluding energy and food prices, rose at a more modest rate of 0.3%.
Major U.S. Economic Reports
|S&P final U.S. manufacturing PMI||Sep||49.8||48.9|
|Job openings||Aug||9.6 million||8.9 million|
|S&P final U.S. services PMI||Sep||50.1||50.2|
|Initial jobless claims||Sep 30||207,000||205,000|
|U.S. trade deficit||Aug||-$58.3B||-$64.7B|
|U.S. employment report||Sep||336,000||227,000|
|U.S. unemployment rate||Sep||3.8%||3.8%|
|U.S. hourly wages||Sep||0.2%||0.2%|
|Hourly wages year over year||4.2%||4.3%|
Closing Prices for the Week
|Dow Jones Industrials Average||33,407.58|
|S&P 500 Index||4,308.50|
|CBOE Volatility Index||17.45|
|U.S. Dollar Index||106.044|
|10-Year T-Note (Dec ’23)||106-270|
|Crude Oil WTI (Nov ’23)||82.79|
|Natural Gas (Nov ’23)||3.338|
|Gold (Dec ’23)||1,845.2|
|Silver (Dec ’23)||21.723|
|Corn (Dec ’23)||492-0|
|Wheat (Dec ’23)||568-2|
|Soybean (Nov ’23)||1266-0|
|Coffee (Dec ’23)||146.05|
|Sugar #11 (Mar ’24)||22.08|
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