(Justin Vaughn, Editor, Options Trading Report)
According to FactSet data, after one third of S&P 500 companies reporting third quarter results, over 75% have bested expectations. (the 5 year average is 77%). This week results from the magnificent seven and heavy-techs, lead off reporting. “Corporate America has held up really, really well given that rates are higher for longer,” said Sylvia Jablobski, CEO and chief investment officer at Defiance ETFs. For the week just ended indexes finished mixed, as the S&P 500 was off 1% while the Dow Jones Industrial Average both negative for the first time in six weeks, after setting records. The Dow Jones did hit 43000, now down 2.7%. As heavy-tech earnings continued to come in, the Nasdaq was driven to a record high of 18690.01, however closing on Friday at 18518.61, not able to eclipse the record high of July 10, 2024. The 10-year U.S. Treasury yield closed at 4.232%.
All the indexes turned around Monday, with the Dow Jones Industrial Average jumping 273 points in a rather docile market day. Last week the Nasdaq Composite finished its seventh straight weekly gain. The Bureau of Labor Statistics released data that available jobs decreased in September to 744,000, down from 807,000 in August, with little market reaction.
Stocks ripped higher on Tuesday, as the Nasdaq Composite exchange, heavily influenced by techs and chips roared ahead, leading the index to its 28th record close this year. The index was up 0.8% at 18712, a new record. Nearly a third of S&P 500 companies are reporting 3rd quarter results this week. With most incoming earnings, the Street is anticipating a majority of ‘better-than-expected’ numbers as the history of early releases indicated. The Conference Board index out Tuesday revealed a stronger consumer sentiment level with a growing economy that is doing very well, supported by strong data. The Bond Market, supported by healthy economic numbers, has risen consistently with the 10-year U.S. Treasury yield of 4.272%, off just slightly from a record level. Oil was steady to weaker as Middle East Tensions have eased a bit after Israel’s missile attack on Iran was limited to military installations only.
After a blistering market yesterday, Wednesday took a breather, with all three indexes dropping lower. The release of the GDP (Gross Domestic Product), a strong barometer of tracking “goods and services produced across the economy,” reiterated again that the state of the economy is good and is growing. The news didn’t budge investors and traders as market activity was weak. Stocks sold off Thursday….big time as heavy tech and chips lead the plunge. Earnings were questionable and favorites disappointed.
The Upside Down Housing Market has potential buyers and sellers struggling, with peak real estate prices and stubborn mortgage rates heading back to the 7% range. After peaking over 7%, a slow decline started in September, dropping to new lows, hitting 6.09% three weeks ago. Just after Mr. Powell instituted the half point rate cut, mortgage rates fluttered, eventually climbing to the present range of 6.875%. Many home buyers did jump back in and many missed the opportunity. With continued rising new and existing prices and higher rates, buyers are few and far between. New home sales are flat with 2024 the worst sales year since 1995. “People are only moving if they have to,” said Nicole Dudlkey, a real-estate agent in the Phoenix area. “We’ll go a week without a showing, which is a long-time compared to even last year.” The recent mortgage rate climb in October after the Fed rate hike coincides as the 10-year U.S.
Treasury yield has moved into the 4.2% range and has “sapped momentum from the housing markets.” According to the NAR (National Association of Realtors) housing markets could “turn around” in 2025. Census Bureau data also predicts new home sales could show a measured upturn as 2024 finishes and 2025 begins.
RUMBLINGS ON THE STREET
Steven M. Sears, writer of ‘THE STRIKING PRICE, Barron’s – “Successful investors tend to have two qualities in common. They don’t lose a lot of money, and they focus intently on arranging their affairs to minimize taxes.”
Ed Yardeni, president of Yardeni Research, speaking about the Fed focusing on the current economic backdrop, rather than guessing where rates should be based on the natural rate. Barron’s – “It’s a fairy tale concept. Everyone agrees it can’t be measured, and everyone agrees it’s constantly changing….The reality is we’ve had a really good economy with the fed funds rate at 5.,5%”
Erica Snyder, CEO of Hunter Associates, Barron’s – “:The market will go through bursts of volatility as it reconciles the tug of war between inflation and interest rates,” says Ms.Snyder. She describes the fluctuations as “short-term temper tantrums to reset valuations.”
Greg Valliere chief U.S. policy strategist for AGF Investments, Barron’s – “In this unserious campaign, dominated by debate over who’s fascist or who looked impressive in a locker room, most major issues have been ignored. The budget deficit? Hardly a peep.”
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