Market Minute
Weekly analysis from the FS Investments Research team
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October 28, 2024
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Equities
U.S. equities had a choppy week and recovered some early-week losses, delivering a mixed outcome. The market continues to navigate mostly positive earnings reports, a data-dependent Fed, and a historically close upcoming election. Consumer discretionary stocks led, with Tesla (+22% on Thursday) achieving its largest daily gain since 2013, which helped propel the Magnificent 7 close to their all-time high. Next week features the largest crop of earnings results in the Q3 reporting calendar, headlined by many of the Magnificent 7. Stocks outside the U.S. underperformed as the U.S. dollar strengthened, and the wild ride continued in Chinese equities, which ended roughly flat.
Fixed income
Yields remained elevated last week as the election increasingly looks like a catalyst for the duration selloff. Markets are increasingly pricing in a Trump victory, which they view as a higher growth, higher deficit outcome. Additionally, strong data has caused markets to cut back rate cut expectations to 91 bps of cuts in 2025, all adding to the uptrend in yields. The 10-year tested as high as 4.25% midweek before ending at 4.24%, up over 50 bps since the Fed cut rates on September 18.
Commodities
Crude oil prices rose modestly, regaining the $70/bbl line. Still, the glide down in crude prices over the past four months has sent national average gasoline prices down to $3.14/gal, the lowest since February. Prices continues to be highly attuned to growth data in China and developments in the Middle East. Gold continued to press higher despite rising interest rates.
Economic overview
Second-tier data out last week took a back seat to earnings and the election. The housing market’s state of suspended animation continued as existing home sales surprised to the downside on the month, down –1.0% to 3.84 million units. This is setting up 2024 sales to be the weakest since 2010. Initial jobless claims fell to 227,000 in the week ending October 18, although continuing claims remains elevated in the wake of the hurricanes. Next week the focus will likely be on the monthly jobs report. The consensus expects 120,000 jobs added in October and an unemployment rate of 4.1%.
Source: Bloomberg Finance, as of 11:30am on October 18, 2024.