All Content

The final full week of October was a relatively quiet one for traders as there were only a couple of major news items released.
On Thursday, the Flash Manufacturing PMI and the Flash Services PMI were announced. It was revealed that manufacturing was still in a contraction phase coming in at 47.8. Anything under 50 suggests that the sector is contracting, but it’s worth noting that it beat estimates of 47.5 prior to the release.

Meanwhile, the service sector was still in a period of expansion, coming in at 55.3 compared to an expected 55. As has been the case for most of 2024, demand for services has buoyed the economy while manufacturing struggles to find any sort of momentum. Data from the University of Michigan showed that consumer sentiment increased to 70.5 from 68.9 last month. Therefore, it’s possible that service spending may continue to increase throughout the rest of 2024.

However, there may have been some moderately good news on that manufacturing front as the Richmond Manufacturing Index came in at negative 14 on Monday compared to an expected negative 19. Also on Thursday, unemployment claims for the past seven days were made public, and it was revealed that 227,000 such claims were made. That figure came in below the expected 242,000 requests for benefits over the previous seven days.

The S&P 500 finished the week down .9 percent to close at 5,808. It made its high of the week on Monday when it hit 5,864 and made its low of the week on Wednesday when it dipped to 5,767.

The Dow was down 2.5 percent this week to finish at 42,114. As with the S&P, the Dow made its high of the week on Monday and would spend the rest of the week in a freefall. On Monday, the market climbed to 43,193 and would ultimately close at its low of the previous five trading days.

Finally, the Nasdaq finished slightly higher this week thanks to a rally on Friday. Over the past five trading days, the index gained .16 percent to close at 18,518. It made its low of the week on Wednesday dipping to 18,161 before reversing and making a high of 18,684 on Friday morning.

There were a number of important news releases taking place internationally. On Wednesday, the Bank of Canada (BOC) reduced the nation’s key interest rate by 50 basis points from 4.25 percent to 3.75 percent. On Friday, Canada revealed that both core and overall retail sales dropped during the past month by .4 percent and .7 percent, respectively.

Many nations across the Eurozone also released Flash Services and Flash Manufacturing PMI data. As with the United States, most reported figures below 50 for manufacturing and above 50 for services with the United Kingdom being the only exception. Its Flash Manufacturing PMI came in at 50.3.

On Tuesday, the CB Consumer Confidence and JOLTS reports are due to be released, and nonfarm payroll data will be released on Wednesday and Friday. The Core PCE Price Index for September will be released on Thursday, which may provide some context as to how the Fed rate cuts have impacted the market. Australia, Germany and Switzerland are also expected to report CPI data next week while Japan is going to make its next rate decision at some point on Wednesday night.

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.