Market Data as of Week Ending: 10/25/2024 unless noted otherwise
The S&P 500 ended its streak of six consecutive weekly gains. The broad market index finished the week down with lower sentiment and a mixed start to Q3 earnings season (37% of companies in the S&P 500 Index have reported). Positive earnings surprises have been offset by downward revisions. As a result, the blended EPS growth rate for Q3 increased last week to 3.6% but remains lower than the 4.3% estimate at the beginning of the quarter. Growth stocks outperformed value, and large companies outperformed their small and mid-sized peers. Sector performance was mixed for the week, with leadership primarily coming from growth sectors such as consumer discretionary and information technology. All other sectors declined for the week, with notable weakness in materials, healthcare and industrials. Developed foreign markets and emerging markets declined as both underperformed domestic stocks on slower growth expectations and uncertainty.
Bond yields increased across the curve as investor sentiment shifts due to concerns about fiscal spending and inflation expectations. The yield curve remains positively sloped, with the 10-year yield higher at 4.25%, and the 2-year also rose to 4.11%. Returns were negative in all bond segments and across the curve, with short-duration high-yield bonds outperforming. Despite risk aversion in the stock market, yield spreads in the bond market were more stable. Yields on U.S. Corporate and high yield Bonds increased, with corporates ending the week at 5.10% and high yield at 7.47%.
It was a light week for economic data as investors await the first estimate of Q3 GDP growth. The Atlanta Fed GDPNow estimate for the third quarter narrowly declined to 3.3% on a mix of housing and manufacturing data. New orders for durable goods declined -0.8% for the month of September, which was slightly better than expected. However, excluding the volatile transportation industry, durable goods increased 0.4%, which was also better than expected. New home sales advanced 4.1% to a seasonally adjusted annual rate of 738,000 in September, the highest level since May 2023. However, existing home sales dropped 1% to a seasonally adjusted annualized rate of 3.84 million in September 2024, the lowest level since October 2010. Other notable economic data included a continuation of the divergence between the services and manufacturing segments of the economy. The flash S&P Composite PMI for October increased to 54.3, driven by the service sector at 55.3, while manufacturing output contracted (47.8) for the third consecutive month.