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Equities Fall on Mixed Data and Earnings
Equity markets dropped modestly last week amid mixed earnings and economic data releases. Global equities (represented by the MSCI All Country World Index) were down -0.38%, and domestic stocks (represented by the S&P 500 Index) were down -0.61%.
The consumer discretionary sector weighed on S&P 500 performance last week as it fell 3.1%. Target is one of the notable components of the sector who saw their shares fall 6% for the week after reporting lower-than-expected earnings and negative earnings guidance. However, other large retailers such as Wal-Mart, Foot Locker, and Ross Stores had positive earnings surprises. US retail sales for October were also released showing a 1.3% rise from September, above expectations and the largest gain since May.
The US Core Producer Price Index slowed its pace for a year-over-year rise of 6.68% for October compared to September’s 7.12%. This reading along with the previous week’s Consumer Price Index report have been encouraging news that inflation is moderating.
Higher rates continue to impact the real estate market as US existing home sales fell for the ninth consecutive month in October, declining -5.94% from the previous month. According to Freddie Mac, the current average 30-year fixed mortgage rate is 6.61%, over double the average rate of 3.22% at the beginning of 2022.
The shortened holiday trading week still holds a multitude of data releases such as US Fed meeting minutes, consumer sentiment, and weekly unemployment claims. Consumer sentiment bottomed in June, and unemployment claims have remained rangebound between 214,000 and 226,000 since the end of September.
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.
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