Last week was one of mostly steady gains on Wall Street, with fresh records set for the S&P 500 and Dow Jones Industrial Average. U.S. equity indexes continue to charge higher through October so far.
Markets continue to digest the recent slight uptick in Consumer Price Index (CPI) and monthly payrolls data in earnest, feeling confident that the Fed may have threaded the needle just right with the recent 50-basis-point rate cut. Optimism continues surrounding another rate cut at the November 7th meeting.
Summarizing the major US equity indices last week, we saw the S&P 500 rose by 0.85%, the Nasdaq 100 rose by 0.26%, and the Dow Jones Industrial Average outperformed the preceding two indexes, increasing by 0.96%.
Teflon-Like
Let•s take a moment to reflect on how resilient the major U.S. markets have continued to behave, even during the historically volatile month of October during a presidential election year. It has been an excellent time period to be a long-term investor.
An amazing advantage of being a long-term investor: even when volatility picks up (and it will again at some point!), time in the market allows investors to remain vigilant and steadfast, given the nature of long-term investing.
Those who have followed the plan and continue to benefit have been rewarded big time, even when many Americans have struggled with inflation and high prices for a prolonged period.
Major Averages Make It Six In A Row
The S&P 500, Dow, and Nasdaq all notched their sixth consecutive positive weeks! Let•s not get too spoiled • this is the longest string of weekly advances for the Dow and the S&P 500 in 2024.
Last week•s theme was strong earnings, with multiple positive earnings stories and surprises. For example, Netflix rose around 11% last Friday, as Q3 earnings beat on both the top and bottom lines.
To view a comprehensive list of last week•s earnings, check out this page.
Retail Sales Strong / Weekly Jobless Claims Drop
In an otherwise rather quiet news week for major economic data releases in the U.S., retail sales data provided a solid boost last Thursday, with September retail sales showing a 0.4% gain versus expectations for 0.3%.
The American consumer remains strong and is not showing an unwillingness to spend despite record-high credit card balances and higher interest rates over the past few years.
On the same day, weekly unemployment data was released. Perhaps due to a lack of major economic releases last week and recent uncertainty surrounding the labor market, more attention was paid than usual.
The reports showed no signs of a weakening consumer or labor market last week. They essentially indicated to traders and investors that the American consumer, which accounts for two-thirds of all economic activity in the U.S., is healthy and that the labor market is in good shape after much uncertainty throughout the summer.
Big Earnings Week
This week, attention will continue to be paid to quarterly earnings results as we hear from giants including Boeing, IBM, and Tesla. Earnings season has gotten off to a solid start.
Aside from earnings, it is another mostly quiet week on the economic calendar. Once again, the big data for the week is the weekly unemployment claims data, along with flash manufacturing and flash services data.
Markets will continue to calibrate and calculate the odds of a November rate cut, with the November Fed meeting coming just two days after election day, on November 7th.
A Reminder on Long-Term Investing
Recently, major market indexes have continued moving higher and have shown few signs of letting up. We will take that, and since many of us have been positioned for so long, we are enjoying the ride.
The same concept holds true regarding market volatility. When will volatility strike again? It will someday • but time in the market sure beats trying to time the market!
While the most recent CPI data showed a slight uptick, it is just one data release, and markets have digested it further, seemingly quite happy that a small uptick in inflation is negated and superseded by the recent 50-basis-point cut.