October 2024 Overview and Outlook

Govt summary:

• The necessary averages closed decrease for the month, remaining below all-time highs
• Election and geopolitical headlines remained on the forefront
• Blended financial signals saved investors cautious
• Earnings season reached the half of-method point with diverse results to this point
• Gold persisted to breakout with rates backing up despite Fed fee decrease

Index performance for October:

Shares fell in October with the S&P 500 ending a five-month dawdle of good points and the Nasdaq Composite marking its first monthly tumble in three months. The little-cap Russell 2000 furthermore fell, continuing the style of underperforming the S&P 500 for the third consecutive month. Semiconductors led the declines, while cosmetics, homebuilders, housing-linked retail, and China tech furthermore slid. Treasuries noticed necessary declines, with yields rising sharply one day of the curve. The two-one year yield rose over 50 foundation aspects, returning to phases above 2.15%, while the ten-one year yield climbed stop to 4.30%. The buck index rose 3.1%, marking its first construct in four months, while gold persisted its upward style with a fourth-straight monthly expand. Other sources cherish Bitcoin and WTI ugly oil furthermore noticed good points, with Bitcoin futures up 11% and ugly oil rising by 1.6%.

The necessary focus this month modified into the expand in Treasury yields, which noticed potentially the most spirited selloff since September 2022. Contributing components incorporated elevated scrutiny over the debt and deficit, optimism round a snug or no-touchdown express attributable to solid financial recordsdata and rising political uncertainty. Bond market volatility furthermore surged, with the BofA MOVE index reaching a one year-to-date excessive, potentially impacting each Treasuries and equities transferring forward. No matter the uptick in yields, equities confirmed resilience, with the S&P 500 ending handiest moderately decrease for the month with financial enhance and earnings outlooks acting as increase. However, concerns stay over inflation, Treasury provide, and geopolitical uncertainties, alongside with challenges in areas cherish AI investment charges, housing, and consumer sentiment.

Financial recordsdata this month presented a combined portray, with some solid signals in the labor market. The September payroll list exceeded expectations, coming in at 254,000 jobs versus the consensus of 150,000, and outdated months had been revised larger by a combined 72,000 jobs. However, other labor market indicators confirmed some softening, as JOLTS job openings fell to their lowest level since January 2021. Consumer confidence recordsdata published a tiny uptick, breaking an eight-month decline in labor market sentiment. Inflation recordsdata added complexity, with September’s core CPI working hotter than anticipated, though closing Michigan search recordsdata confirmed a decline in one-one year inflation expectations to one year-to-date lows, and October’s preliminary PMI recordsdata indicated that prices charged by businesses had been at their lowest since Might perhaps maybe 2020. This mixture of sturdy enhance signals and tentative disinflationary signs has influenced expectations round Federal Reserve coverage, leading to a re-evaluation of fee decrease probabilities for the months forward.

No matter the whole combined signals this month, potentially the most spirited overhang also will be the upcoming election as market sentiment has been impacted by rising political uncertainty. Investors are preserving a stop watch on coverage stances and doubtless impacts on replace, fiscal coverage, and regulatory modifications, namely as polls tighten. The different of a shift in administration or legislative steadiness raises questions about future approaches to financial stimulus, tax coverage, and spending priorities, which can maybe hold an affect on sectors starting from infrastructure and expertise to healthcare. Market volatility has historically elevated in the lead-as much as elections, as investors weigh that you’re going to also have faith outcomes, and this cycle is not any longer any exception. The elimination of election-linked uncertainties also can provide clarity and presumably relief to the markets, reckoning on results, atmosphere the stage for submit-election positioning and doubtless market re-alignments.

Sector performance total return for October:

Earnings commentary:

With 70% of S&P 500 firms reporting earnings for Q3’24, the results hold been combined. Up to now, 52% of firms hold reported a beat on revenues, with 30% lacking estimates, and 18% matching. The frequent beat modified into 1.5%. EPS reports on the different hand noticed firms beating on the subject of 75% of the time, below the 5-one year common of 77% but consistent with the ten-one year common. Smartly being Care stocks reported potentially the most spirited prime line upside with a median beat of ~3.3%, adopted by Financials at 2.2%. Communications stocks noticed potentially the most spirited upside shock when it comes to EPS with common shock of 14.1%, adopted by Consumer Discretionary with 11.8%, and Financials with 9.3%. In mixture, the 7.1% earnings above estimates are below the 5-one year common of 8.5% but above 10-one year common of 6.8%.

On the growth front, 72% of firms hold reported earnings enhance, with 23% declining, and 5% flat, with a median enhance fee of 5.3%. Vitality and Consumer Staples firms took potentially the most spirited hit with handiest 43% and 46% respectively reporting enhance. Vitality and Industrials reported harmful earnings enhance of -4.7% and -0.2% respectively. Contrarily, Communications led the sales enhance tale with a median print of 9.8%, adopted by Smartly being Care with 9.7%.

Earnings enhance modified into consistent with sales enhance as 71% reported sure enhance, 28% reducing, and 1% in line, with a median EPS enhance fee of 8.8%. Communications and Consumer Discretionary led the style with 27.2% and 22.4% EPS enhance, adopted by Smartly being Care 12.7%, Technology 10.5%, and Financials 9.2%. Vitality, Industrials, and Materials posted harmful EPS enhance after reporting declines of 19.9%, 11.3%, and a pair of.1%, respectively.

Gross sales and earnings results by S&P sector:

2-day tag reaction following earnings releases:

Fed Price In the reduction of Odds:

Yield Curve:

Gold:

Taking a look forward:

November 2024 will trail down in the historical past books a technique or the different with the election kicking issues off in the first week. If that wasn’t sufficient, the FOMC will then meet 2 days later at which point they’re anticipated to diminish one other 25bps from the Fed Funds fee. Many investors had been caught a little bit off guard after they decrease 50bps on the final meeting, which then noticed rates without lengthen backup, so it goes to be spirited to examine which method the market goes after this doubtless decrease. There will furthermore be a slew of potentially the necessary financial recordsdata all around the month that would also likely weigh heavily on the Fed’s December meeting. Outside of the whole recordsdata, November has been potentially the most spirited month for stocks all the strategy through the final 10 years with a median return of 3.81% for the S&P 500. All the strategy through that length of time, handiest 2021 noticed stocks plunge in November, so bulls will look to uncover abet watch over of the market and hold it to new all-time highs.

Financial Calendar:

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