The Weekly Update
Week of October 30th, 2023
By Christopher T. Much, CFP®, AIF®
Amid a busy week of corporate earnings reports, stocks slumped on cautious earnings guidance, fears of higher interest rates, and growing anxiety over the increasing amount of Treasury bonds and notes coming to market.
The Dow Jones Industrial Average dropped 1.88%, while the Standard & Poor’s 500 declined 3.29%. But the Nasdaq Composite index gave up 4.48% for the five trading days. The MSCI EAFE index, which tracks developed overseas stock markets, retreated 1.82%.
October Slide Continues
Stocks continued their slide last week despite mostly better-than-expected earnings results. While earnings surprises were generally positive, investors were troubled by declines in year-over-year net profit margins and tepid earnings guidance. Particularly hard hit were technology companies, following mixed earnings results.
Economic data released on Thursday showed remarkable economic strength, with above-consensus forecast growth in third-quarter Gross Domestic Product (GDP) and September’s durable goods orders, with only a minor uptick in initial jobless claims. The results fanned worries that the Fed might need to hike rates further or, at least, maintain high rates for longer.
Strong Economic Data
The first read of third-quarter economic growth was a blowout, with GDP increasing at an annualized rate of 4.9%. This pace was well ahead of the prior quarter’s 2.1% expansion and above consensus forecasts. Powering the third quarter’s economic performance was strong consumer spending and inventory build-up.
Durable goods orders jumped 4.7% in September, confirming the nation’s continued good economic health, easily outpacing the 0.1% rise in August and economists’ forecast of two percent. Meanwhile, initial jobless claims slightly increased, suggesting that the labor market remains healthy.
This Week: Key Economic Data
Wednesday: FOMC Announcement. Automated Data Processing (ADP) Employment Report. Institute for Supply Managers’ (ISM) Manufacturing Index. Job Openings and Turnover Survey (JOLTS).
Thursday: Factory Orders. Jobless Claims.
Friday: Employment Situation. Institute for Supply Managers’ (ISM) Services Index.
Source: Econoday, October 27, 2023
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts are also subject to revision.
This Week: Companies Reporting Earnings
Monday: McDonald’s Corporation (MCD), Arista Networks, Inc. (ANET)
Tuesday: Pfizer, Inc. (PFE), Caterpillar, Inc. (CAT), Amgen, Inc. (AMGN), Marathon Petroleum Corporation (MPC)
Wednesday: Advanced Micro Devices, Inc. (AMD), CVS Health Corporation (CVS), Qualcomm, Inc. (QCOM), PayPal Holdings, Inc. (PYPL), Humana, Inc. (HUM)
Thursday: Apple, Inc. (AAPL), Starbucks Corporation (SBUX), Shopify, Inc. (SHOP), Eli Lilly and Company, Inc. (LLY), Duke Energy Corporation (DUK), Cigna Group (CI), ConocoPhillips (COP)
Friday: Berkshire Hathaway, Inc. (BRK.A)
Source: Zacks, October 27, 2023
The companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
