Weekly Market Performance – Market Move Higher Amid Positive Earnings and Economic Reports
U.S. and International Equities
Major U.S. and International Markets Finished Higher
The major equity markets finished solidly in the green this week as we head into the genesis of Q3 earnings season. The international markets, as represented by the developed markets (MSCI EAFE Index) along with the emerging markets (MSCI EM Index) finished the week higher and outperformed their large cap counterparts in the United States. Every sector with the exception of communication services finished the week higher as investors took advantage of oversold conditions from last month’s market pullback.
October’s Reputation for Spooky Markets
October gets a bad rap as a difficult month for stocks because of crashes during 1929, 1987, and 2008 to be specific, but it has historically been about an average performing month. A positive aspect of the month of October is that it begins the fourth quarter which has historically been one of the best performing quarters for equities.
Fixed Income and Commodities Recap
Bonds Lower While Commodities Ended Mostly Higher
The Bloomberg Barclays Aggregate Bond Index finished higher, reversing three straight weeks of lower prices and thus higher interest rates for the index on the back of inflation concerns. Investment-grade corporate bonds, as tracked by the Bloomberg Barclays Credit index, rebounded this week almost 1% after last week’s selloff.
Oil finished higher for the fourth straight week amid worldwide supply concerns. Moreover copper and silver finished higher this week as investors anticipate higher demand as signs of economic improvement continue to emerge.
“The favorable earnings reports for banks allowed investors to forget a relatively weak September and thus push markets higher,” explained LPL Research Senior Vice President and Director of Research Marc Zabicki. “The market gains extended into credit markets while oil continues to rise as well.”
Economic Weekly Roundup
Fed Taper Talk
The September Federal Open Market Committee (FOMC) meeting minutes were released this week and showed that a formal announcement on tapering is likely coming in November. The minutes reported that FOMC members viewed that possibly tapering could start in either mid-November or mid-December. Moreover, the Committee remains divided on when interest rate hikes could begin. Some participants believe that it would likely be appropriate to keep the Federal Funds rate at or near its zero lower bound for the next couple years.
Headline CPI Topped Estimates While Core PPI Simmered
The Bureau of Labor Statistics released September Consumer Price Index (CPI) this week. The report showed that headline CPI climbed 0.4% month over month vs. the Bloomberg estimates of 0.3%, while core CPI, which excludes food and energy prices, matched expectations. The Producer Price Index (PPI) for September slowed to a 0.5% increase month over month, in line with consensus. Core PPI (excluding food and energy) came in well below consensus estimates and grew at its slowest pace since May.
Retail Sales Shine
The U.S. Census Bureau released September retail sales data on Friday showing overall sales outperforming the Bloomberg consensus. Factoring out automobile and gasoline sales, last month’s sales handily surpassed expectations. In addition, August sales were revised higher, providing solid evidence of consumers’ resilience amid elevated Delta variant numbers.
The following economic data is slated to be released during the week ahead:
Monday: September capacity utilization, industrial and manufacturing production, October National Association of Home Builders Housing Market Index
Tuesday: September building permits and housing starts
Wednesday: Federal Reserve Beige Book
Thursday: Weekly initial and continuing unemployment claims, September leading indicators and existing home sales
Friday: Purchasing Managers Index (PMI) composite and Markit PMI
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. All market and index data comes from FactSet and MarketWatch.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
U.S. Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
For a list of descriptions of the indexes referenced in this publication, please visit our website at lplresearch.com/definitions.
This Research material was prepared by LPL Financial LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.
Not Insured by FDIC/NCUA or Any Other Government Agency
Not Bank/Credit Union Guaranteed
Not Bank/Credit Union Deposits or Obligations
May Lose Value
For Public Use – Tracking #1-05202560