Click Here to view today’s Global Momentum Guide The Russell 2000 Index rose 1.87 percent last week, the Dow Jones Industrial Average 0.96 percent, the S&P 500 Index 0.85 […]
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Market Perspective for October 19, 2024
Retail sales data released this week shows that the American consumer still has a desire to spend despite calls of a coming recession. On Thursday, it was revealed that core retail sales were up 0.5 percent over the past month compared to expectations for a 0.1 percent increase.
Overall retail sales were up 0.4 percent over the past month compared to expectations for an increase of 0.3 percent during that time period. Core retail sales for August were revised upward to 0.2 percent. Ultimately, these figures have convinced some economists that the Fed shouldn’t follow through with further rate cuts in November or December.
As late as last week, it was assumed that at least one 25-basis point cut was coming in November or December. In fact, some were calling for cuts at both meetings to close out the year. However, some argue that it’s silly to cut rates when stock markets, job growth and other economic conditions are strong.
On the other hand, some argue that the economy is only doing well because of the belief that rates are coming down. Ultimately, failing to follow through on that promise would cause the economy to soften.
Also on Thursday, unemployment claims data for the last seven days was made public. During that period, there were 241,000 claims for benefits, which was exactly what analysts expected prior to the release. This was down from 260,000 claims last week in the immediate aftermath of Hurricane Milton.
The S&P 500 closed the week at 5,865, a gain of 0.85 percent for the week. On Wednesday morning, the index made a low of 5,804 before reversing and gaining ground the following two days. On Thursday, the market made its high of the week when it hit 5,878.
The Dow was up 0.96 percent this week to close at 43,276. On Tuesday, the market made its low of the week when it dipped to 42,692 and would make its high of the week on Friday when it briefly went about 43,300.
Finally, the Nasdaq closed the week at 18,489, a gain of 0.69 percent since Monday. On Monday morning, the market made its high of the week at 18,547 while it would make its low of the week on Wednesday morning when it hit 18,214.
In commodity news, gold hit a new record high, surpassing $2,700 an ounce this week. It has increased nearly $700 an ounce since hitting a yearly low in February. Concerns about a possible recession, tensions in the Middle East and other factors have combined to make the commodity a popular alternative investment over the past several months.
International markets experienced periods of volatility this week as several countries released important economic news. On Thursday night, Great Britain revealed that retail sales increased 0.3 percent on a monthly basis compared to an expected drop of 0.4 percent. On Thursday morning, the European Central Bank (ECB) announced it was cutting its main interest rate from 3.65 percent to 3.4 percent. On Tuesday morning, Canada announced that CPI went down by 0.4 percent on a monthly basis and was currently sitting at 2.1 percent on an annualized basis.
The American market will be light on news next week, which may allow market participants a chance to breathe and assess their positions headed into the end of the year. It will also give them a chance to craft a plan for what they might do depending on the results of the upcoming elections. The only major news on the schedule includes the release of the Flash Manufacturing PMI and Flash Services PMI in addition to unemployment claims data all on Thursday morning.
The Investor Guide to Vanguard Funds for October 2024
The Investor Guide to Vanguard Funds for October is AVAILABLE NOW! Links to the October data files are posted below. Market Perspective: Rate Cuts Spur Stock Rally The past month […]
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Global Momentum Guide for October 14, 2024
Click Here to view today’s Global Momentum Guide The Dow Jones Industrial Average expanded 1.21 percent last week, the Nasdaq 1.13 percent, the S&P 500 Index 1.11 percent, the […]
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Market Perspective for October 13, 2024
The past five trading days featured several developments that created a bit of volatility, though the major indexes all managed weekly gains. The first major news item came out on Wednesday when the FOMC meeting minutes for September were made public. Perhaps the biggest takeaway was that there were a range of opinions as to how aggressive the Fed should have been in cutting rates.
While all agreed that a rate cut was appropriate, not everyone was on board with a 50-point cut behind the scenes. Publicly, only one official dissented and said that a 25-point cut was the best course of action. This provided some fuel that there might be either a pause in November or shallower rate cuts than what the market predicted would occur just last week.
On Thursday, inflation data was released and came in slightly higher than expected on both a monthly and yearly basis. Core CPI was up .3 percent on a monthly basis compared to an expected increase of .2 percent, while overall CPI was up .2 percent on a monthly basis compared to an expected increase of .1 percent. Annual inflation came in at 2.4 percent, which was slightly higher than the projected 2.3 percent.
Market analysts believe that this further makes a case against cutting rates by more than 25 basis points in November or December. However, it is also important to mention that jobless claims came in on Thursday at 258,000 for the previous seven days. There is some speculation that Helene and Milton were responsible for the uptick because of the damage and general disruption those storms caused.
On Friday, the Price Producers Index (PPI) was made public. It found that Core PPI came in at .2 percent, which was exactly what the market thought it would be. It also found that the overall PPI was unchanged, which was lower than the expected increase of .2 percent. This may imply that inflation could remain steady or perhaps continue to drift lower in the coming months.
Also on Friday, the University of Michigan released its consumer sentiment and inflation expectation reports. Consumer sentiment came in at 68.9, which was lower than the expected 70.9 and lower than last month’s adjusted reading of 70.1. Inflation expectations have crept up to 2.9 percent from 2.7 percent last month. Ultimately, the two reports mean that consumers are souring on the economy and that it’s likely at least in part because of a belief that inflation won’t be reined in.
The S&P 500 finished the week up 1.1 percent to close at 5,815, which was an increase of roughly 90 points over the past five trading days. The weekly low of 5,694 occurred late on Monday afternoon while the market closed near the high of the week.
The Dow finished the week up 1.2 percent to close at 42,863. Like the S&P, the Dow made its low of the week on Monday dipping to 41,859 while closing the week at its highest point.
Finally, the Nasdaq finished up 1.1 percent this week to close at 18,342. As with the other indexes, it made its low of the week on Monday, spent the rest of the week moving higher.
In international news, Great Britain announced on Friday morning that its gross domestic product (GDP) grew by .2 percent over the past month. Canada announced on Friday that the economy there added 46,000 jobs and the unemployment rate dropped to 6.5 percent. On Tuesday morning, New Zealand announced that its key interest rate was being reduced by 50 basis points to 4.75 percent.
The upcoming week will see retail sales data released in the United States on Thursday. Meanwhile, Great Britain will announce inflation and retail sales figures next week while the Eurozone will make its next monetary policy decision on Thursday morning.