Weekly Market Insights: Boost early last week keeps markets ahead

A strong two-day rally in equities cemented a positive week for investors as a new month of trading began. The Dow Jones Industrial Average rose 1.99%, while the Standard & Poor’s 500 gained 1.51%. The Nasdaq Composite Index was up 0.73% for the week. The MSCI EAFE Index, which tracks developed foreign stock markets, gained 3.42%.1,2,3

Stocks start strong

Stocks opened the week with their best two-day rally since March 2020, buoyed by the UK Prime Minister’s decision to reverse a tax cut proposal that had upended financial markets the previous week.4

Falling yields further fueled investor enthusiasm, as did fresh economic data pointing to a slowing economy. Losses over the past two days erased much of gains as concerns over higher interest rates and a recession came to the fore again. The selling pressure came on the back of a series of hawkish comments from Fed officials and jobs data that suggested the Fed was likely to stick with its rate hike plans.

A mixed job

Employment-related reports offered conflicting signals on the state of the labor market. In a sign of slowdown, job vacancies fell 10% in August, while a subsequent report from Automated Data Processing (ADP) showed continued job strength. ADP reported that private employers added a better-than-expected 208,000 jobs in September and annual wages rose 7.8% from a year earlier.5.6

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Jobless claims rose to 219,000 from 190,000 the previous week, in line with the 2019 average. The September jobs report showed employers added 263,000 jobs — slightly fewer than expected. The combination of new hires and lower labor force participation resulted in a drop in the unemployment rate to 3.5%.7.8

This week: economic data

  • Wednesday: Producer Price Index (PPI). Federal Open Market Committee (FOMC) meeting minutes.
  • Thursday: Consumer Price Index (CPI). unemployment claims.
  • Friday: retail sales.

This week: Companies reporting earnings

  • Wednesday: Delta Air Lines, Inc. (DAL), PepsiCo, Inc. (PEP).
  • Thursday: Wells Fargo & Company (WFC), Walgreens Boots Alliance, Inc. (WBA), BlackRock, Inc. (BLK).
  • Friday: JPMorgan Chase & Co. (JPM), UnitedHealth Group, Inc. (UNH), Citigroup, Inc. (C), Morgan Stanley (MS), The PNC Financial Services Group, Inc. (PNC), US Bancorp (USB).
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footnotes and sources

  1. The Wall Street Journal, October 7, 2022
  2. The Wall Street Journal, October 7, 2022
  3. The Wall Street Journal, October 7, 2022
  4. CNBC, October 3, 2022
  5. The Wall Street Journal, October 4, 2022
  6. CNBC October 5, 2022
  7. The Wall Street Journal, October 6, 2022
  8. CNBC, Oct. 7, 2022
  9. IRS.gov, May 19, 2022
  10. Greatist.com, May 26, 2022


Paul Ellis
Photo by Paul Ellis, CIMA®.

Paul Ellis, CIMA® can be reached at 425.405.7720 or [email protected]

www.elliswealthmangement.net

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