Posted by:
Comments:
Post Date:
Table of Contents
Equities Continue to Climb Higher on Holiday-Shortened Week
Equity markets rose during the holiday-shortened week marking the fourth consecutive positive week in a row. Global equities (represented by the MSCI All Country World Index) were up 0.97%, and domestic stocks (represented by the S&P 500 Index) were up 1.02%.
S&P 500
With around 94% of S&P 500 companies reporting third quarter earnings, it seems the streak of quarterly earnings declines will be broken. As of Friday, the average earnings gain for the S&P 500 was 4.3% according to FactSet. 82% of companies who’ve reported results have beaten earnings estimates, higher than the 10-year average of 74%. At the sector level, nine of the eleven sectors had stronger earnings growth than initially estimated at the end of the second quarter as depicted below.
Home Sales
Existing home sales in the US fell sharply by 14.6% on a year-over-year basis in October. Existing home sales fell to 3.79M from 3.95M in September, marking the lowest level in 13 years.
Commerce Department
The Commerce Department’s release of durable goods orders on Wednesday showed a decline of 5.4% in October. This was the second largest drop since April 2020 which was mainly fueled by a drop in civilian aircraft orders. However, excluding aircraft and defense, orders still fell slightly.
FOMC
Minutes from the last FOMC meeting were released Tuesday which showed no inclination of rate cuts in the near future. Members largely agreed that restrictive policy is warranted until more data shows a stronger trend towards their 2% inflation target.
Looking Ahead
This week the second estimate of Q3 GDP will be released, and an inflation report in the form of the Personal Consumption Expenditure (PCE) Price Index will give more insight into the trend of inflation. The initial estimate of Q3 GDP showed growth at an annual rate of 4.9%, up from Q2’s 2.1% and beating expectations. September’s PCE reading showed continued moderation on a year-over-year basis as the core PCE index fell to a rate of 3.7% from 3.8% the month prior.
I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
Financial planning and Investment advisory services offered through Diversified, LLC. Diversified is a registered investment adviser, and the registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC. A copy of Diversified’s current written disclosure brochure which discusses, among other things, the firm’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. Diversified, LLC does not provide tax advice and should not be relied upon for purposes of filing taxes, estimating tax liabilities or avoiding any tax or penalty imposed by law. The information provided by Diversified, LLC should not be a substitute for consulting a qualified tax advisor, accountant, or other professional concerning the application of tax law or an individual tax situation. Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.