October 31st – Weekly Update

  • It was a mixed week for U.S. equity indexes with the Dow Jones slightly rising while the Nasdaq and S&P 500 both posted a modest loss. The 10-year U.S Treasury yield closed at approximately 1.85%. Oil prices dropped for the period and gold was up.
  • With 58% of S&P 500 companies having reported first quarter results, 74% have beaten earnings expectations while 58% have beaten sales expectations. According to FactSet, the third quarter blended earnings growth rate for the S&P 500 is 1.6%. 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. T-Mobile, Proctor & Gamble and Cheesecake Factory impressed this week; Time Warner, Nielsen and Nokia were among the disappointments.
  • Another week of Fed speak and political uncertainty was concluded with advance estimate third quarter U.S. gross domestic product (GDP) data, which increased at an annual rate of 2.9%. This compares to 1.4% during the second quarter.
  • Preliminary U.S. manufacturing and services PMI data were both up for the month of October. The U.S. Manufacturing PMI rose from 51.5 to 53.2, while the U.S. Services PMI expanded at the fastest pace for 11 months.
  • New U.S. home sales also posted gains increasing 3.1% in September compared to August. July remains the best month for home sales since 2007. The National Association of Realtors reported that its pending home sales index rose 1.5% in August.
  • The Chicago Fed National Activity Index’s three-month moving average dropped to -0.21 in September from -0.14 in August. This suggests that economic growth remains somewhat below its historical trend and that inflationary pressure from economic activity over the next year should remain subdued.
  • U.S. initial claims for unemployment for the week ended October 22 came in at 258,000. A number under 300,000 ordinarily implies a strong job market. This was the 86th week that initial jobless claims were in that range.
  • Industrial profits in China slowed to a 7.7% gain in September following a 19.5% August surge.

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