November 7th – Weekly Update

  • Election outcome uncertainty weighed heavily on multiple assets during the week. The Nasdaq, S&P 500 and Dow Jones all posted losses for the period. Global markets also took a hit with the Stoxx Europe 600, Global Dow and FTSE 100 all losing ground. Oil dove roughly 10% while gold finished the period higher. The 10- year U.S. Treasury yield closed at approximately 1.8%.
  • With 85% of S&P 500 companies having reported first quarter results, 71% have beaten earnings expectations while 54% have beaten sales expectations. According to FactSet, the third quarter blended earnings growth rate for the S&P 500 is 2.7%. If the index reports growth in earnings for the quarter, it will mark the first time the index has seen year-over-year growth in earnings since Q1 2015. Valeant Pharmaceuticals, Office Depot and Yelp impressed this week while BP, Facebook and Wynn Resorts were among the disappointments.
  • The S&P 500 posted the longest period of consecutive daily losses during the period, notching nine straight days.
  • The Federal Reserve left rates unchanged at its November meeting, with the implication that a December rate hike is not off the table. The Fed cited “further evidence” of economic improvement being required before committing to an increase. The market’s attention now moves to the Fed’s December meeting, which will bring a “dot plot” and includes a scheduled press conference.
  • Positive jobs data further supported the case for a December rate hike, with 161,000 new jobs in October bringing the unemployment rate slightly down to 4.9% compared to 5% in September. October’s labor participation rate came in at 62.8% compared to 62.5% in October 2015.
  • U.S. manufacturing data were also positive. October’s ISM manufacturing index improved to 51.9 in October from 51.5 in September, coming in just ahead of consensus for 51.7. Most of the key components saw sequential improvement, though new orders did decline to 52.1 from 55.1.
  • U.K. mortgage approvals rose from 60,150 in August to 62,932 in September. The Markit Eurozone PMI Composite Output Index signified positive economic expansion in Europe, rising from 52.6 in September to 53.3 in October.

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