Market Minute

Weekly analysis from the FS Investments Research team
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October 21, 2024

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Equities

U.S. stocks ended the week modestly higher as the bond selloff took a breather. Rate-sensitive sectors such as real estate, utilities, and consumer durables led the way, while energy and health care lagged. Poor results from ASML sent the chip bellwether down –14% but gains from Nvidia were able to keep the industry in the black. Financials kicked off Q3 earnings in largely positive fashion, as capital markets and wealth management-focused results from firms like Morgan Stanley combined with the prior week’s earnings beats from banking titans JPMorgan and Wells Fargo to paint a rosy picture of the sector. Earnings season kicks into high gear this week. Internationally, Chinese stocks fell –2.84% and have now retraced half of their stimulus-fueled rally.

Fixed income

Yields ended the week about where they started, although the data continued to prompt selloffs. The 10-year yield briefly probed below 4% midweek only to be immediately driven higher by the strong retail sales data. Markets still expect a quarter point rate cut at the November 7 FOMC meeting, but the conviction in a final 25bps rate cut in December is weakening.

Commodities

Crude prices dipped –8%, its largest weekly drop in a year as the boost from Chinese optimism faded and the death of Hamas’ leader led to hopes of a truce in Gaza. U.S. crude production hit a fresh all-time high of 13.5 mmbpd, adding to concerns around oversupply. Copper continues to trade in lockstep with Chinese stocks, falling –2% last week. Gold breached $2,700/oz for the first time ever, extending its remarkable run.

Economic overview

Consumers once again defied expectations of moderation as retail sales rose 0.4% m/m in September and were up 0.7% m/m (vs Cons 0.3%) in the “control” category that aligns with GDP. This rounds out another quarter of blockbuster household consumption and the Atlanta Fed’s Q3 GDPNow estimate was pushed up to 3.4%. Industrial production was a weak spot with a –0.3% m/m decline, although this partly reflects disruptions from the hurricane and the Boeing strike. Initial jobless claims eased to 241,000 from 260,000 previously, also likely impacted by the natural disasters hitting multiple states.