|AUTHOR: Jason Roque, CFP®, APMA®, AWMA®|
TITLE: Investment Adviser Rep – CCO
TAGS: S&P 500, NASDAQ, Rates, Earnings, GDP
Last week saw markets officially move into correction territory. Is there more to come?
Monday S&P 500 0.17% | NASDAQ 0.27%
Equities opened the week not knowing where it wanted to go. Fixed Income on the other hand had a clear path higher for longer term rates. A rising rate day usually yields losses on the equity market and that result was mixed Monday.
Tuesday S&P 500 0.73% | NASDAQ 0.93%
Earnings ruled the day on Tuesday. Earnings beats from Verizon (VZ) and General Electric (GE) pushed markets higher. Manufacturing and Services data also signaled better than expected economic strength for the start of the 4th quarter.
Wednesday S&P 500 1.43% | NASDAQ 2.43%
Alphabet (GOOGL) led the way lower on Wednesday as their earnings disappointed due to weak cloud performance. Treasury rates floated higher on strength in the housing market. This led to the highest 30 year mortgage rates in 2 decades.
Thursday S&P 500 1.18% | NASDAQ 1.76%
GDP more than doubled from the 2nd quarter to the 3rd. The 4.9% reading was carried on the back of inventory builds in preparation for the holiday season and consumer spending. This would typically be a GREAT sign… Nope, markets sold off. Continued strength of the consumer means that pricing higher rates for a prolonged period needs to be accounted for. Ultimately, good news as it is a deteriorating view of a recession.
Friday S&P 500 0.46% | NASDAQ 0.39%
The week ended in a mixed tone. The tech markets rallied on Amazon (AMZN) results that beat expectations. Value markets struggled on the day from earnings misses in the energy market. A Friday down day during the current geo-political environment is almost expected. Holding equities into the weekend typically carries heavier risk in this environment.
Conclusion S&P 500 2.51% | NASDAQ 2.61%
Markets cemented a down month for equities in October with this week. Additionally, the NASDAQ and S&P 500 have officially moved into correction territory (down 10% from recent highs).
Consumer discretionary companies begin to roll out earnings over the next few weeks. Markets may see a boost from the spending that happened during the 3rd quarter. That boost might be a welcomed reaction to the last three months pullback. The headline risk of course is the impending budget deadline for congress in mid-November. That could cause enough uncertainty to keep profits at bay.
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