U.S. equity markets navigated a data-heavy week as third-quarter economic growth surpassed projections. Will the Federal Reserve provide sufficient support or leave the door open rate hike later this year?
Monday S&P 500 0.70% | NASDAQ 0.82%
Equities kicked off the week on a positive note as dip-buyers stepped into large-cap technology and communication services shares. Crude oil prices retreated from recent highs, improving sentiment as investors prepared for a pivotal slate of central bank meetings and corporate earnings releases later this week. A slew of economic data is also set to be released tomorrow, with all eyes fixed on the Consumer Confidence reading.
Tuesday S&P 500 0.60% | NASDAQ 1.18%
Benchmark averages extended gains on Tuesday as solid performances across industrials and tech leadership lifted the broader S&P 500. New orders for long-lasting manufactured goods were shown in the Durable Goods release to have increased 1.8% in September. The Conference Board Consumer Confidence release exceeded expectations, rising from 84.2 to 91.7 in October.
Wednesday S&P 500 0.28% | NASDAQ 0.27%
Markets added modest gains on Wednesday ahead of mega-cap tech earnings. The Federal Open Market Committee concluded its policy meeting by maintaining the federal funds target range at 3.75%-4.00% on a 10-21 vote Federal Funds Effective Rate (FEDFUNDS) | FRED | St. Louis Fed. The decision suggested solid underlying economic momentum while maintaining vigilance over persistent price pressures, as tracked via the CME FedWatch Tool.
Thursday S&P 500 0.30% | NASDAQ 1.38%
Selling pressure emerged on Thursday following disappointing technology earnings, which led to concerns that AI exuberance could be inflated. Strong advance Q3 GDP data showing 3.4% annualized expansion was reported by the Department of Commerce and reflected on the Federal Reserve Bank of St. Louis (FRED). September Core PCE inflation ticked higher from 3.0% to 3.1% year-over-year, potentially increasing the likelihood of a rate hike in December.
Friday S&P 500 1.82% | NASDAQ 2.86%
Indices concluded the week with a sharp sell-off led by continued tech earnings reactions. Overall market data tracked on Investing.com NASDAQ Historical Data reflected the worst single-day performance since June. Benchmark Treasury yields declined, with the 10-year Treasury yield finishing at 4.94% according to data from U.S. Department of the Treasury.
Conclusion S&P 500 0.57% | NASDAQ 2.00%
The Federal Reserve’s dual mandate is to maintain full employment and stable prices. The price side of the mandate dictates that it must decide between accommodative and restrictive monetary policy. Rising inflation numbers require close attention to ensure the US economy does not overheat. While GDP is healthy, a decision by the Federal Reserve to increase the federal funds rate in December would represent a move toward a more restrictive policy. More details will emerge as Consumer Confidence, which was a surprise upside in October, will be tested as we close out the year. The underlying pressure by elevated prices, in theory, could deter spending but it may ultimately come down to whether consumers opt to buy now and pay later (consumer credit). This is not a representative of predictable patterns but is worth noting as holiday season is fast approaching.
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