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Equities Continue to Climb Higher on Holiday-Shortened Week

Equities Continue to Climb Higher on Holiday-Shortened Week

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.

Equities Continue to Climb Higher on Holiday-Shortened Week

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.

Mike Horwath

Mike heads the internal Investment Committee that is responsible for the investment direction of the firm. He works closely with Diversified’s financial planners to support the investment side of the lifelong financial planning process. Lastly, it’s Mike’s responsibility to oversee the ever-changing global investment landscape and work with the planners to evaluate the impact on each of our client’s strategies.

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