Market Data as of Week Ending: 11/1/2024 unless noted otherwise
The S&P 500 ended lower for the second consecutive week as investors digested a heavy dose of earnings and economic releases. Earnings momentum remained generally positive, with 42% of the S&P 500 reporting third-quarter earnings last week, including five of the Magnificent Seven. As of Friday, earnings growth expectations for the third quarter have increased to 5.1%, up from 4.3% at the start of earnings season. Growth stocks generally lagged value due in part to results from Apple, Meta and Microsoft. Weakness was broad-based, as nine of the eleven sectors were negative for the week. Leadership primarily comes from growth sectors such as consumer discretionary and communication services. All other sectors declined for the week, with notable weakness in information technology, utilities and real estate. Developed foreign markets and emerging markets declined as both narrowly outperformed domestic stocks as geopolitical concerns and moderating expectations for ECB rate cuts weighed.
Bond yields increased for the sixth week out of the past seven as expectations for renewed inflation and growth outweighed weak manufacturing and jobs data. The yield curve remains positively sloped, with the 10-year yield higher at 4.37%, and the 2-year also rose to 4.21%. Returns were negative in almost all bond segments and across the curve, with short and intermediate-term high yield bonds being the lone gainers. Spreads narrowed slightly as the yields on U.S. Corporate and High Yield Bonds increased, with corporates ending the week at 5.23% and high yield at 7.49%.
It was a heavy week for economic data as investors digested Q3 GDP, jobs and inflation data. The week got kickstarted with a surprise U.S. consumer confidence reading as the index surged to 108.7 in October, its highest level since January. The U.S. grew at an annual pace of 2.8% in the third quarter, slightly below expectations but powered by another strong increase in consumer spending. September’s PCE report showed that prices increased modestly, 0.2% last month, which brought the annual PCE rate to 2.1% year-over-year. Personal spending and incomes rose in September; incomes grew by 0.3 last month while spending increased by 0.5% as lower gas prices and slowing inflation have helped increase household buying power. The U.S. added just 12,000 new jobs in October as labor strikes and hurricanes muddy the picture. The unemployment rate held steady at 4.1% despite this being the smallest increase since December 2020. The ISM manufacturing index came in below 50 for the seventh straight month, reaching 46.5 in October, its lowest reading since July 2023.