Hello, this is Josh Waynick, Senior Investment Strategist at Fifth Third Bank.
Over the last week, global equities moved mostly lower with the S&P 500 down 1.0% on the week, breaking a trend of six weeks of gains. Specifically, the Dow Jones Industrial average fell 2.7%. The S&P 500 retreated by 1.0%, the Nasdaq composite posted gains of 0.2%, and the Russell 2000 fell by 3.0% over the last week.
Looking at debt markets, the U.S. Treasury Yield Curve continued to move higher over the last week with most term points seeing higher yields by approximately 15 basis points. This move to higher treasury yields began in the middle of September and over the last six weeks, most term points on the U.S. Treasury curve sit roughly 60 basis points higher than where they started. Focusing specifically on the last week, the 2-year U.S. Treasury yield ended Friday at 4.10% with the 10-year U.S. Treasury yield ending the week at 4.24%.
The dollar index, which measures the U.S. Dollar against a basket of global currencies, moved higher during the week and ended the week up 0.7%. Gold rose by 1.0% over the week and ended the week at $2,748 per ounce. Oil rose last week and at the end of Friday, West Texas Intermediate sat at $71.78 per barrel, sitting very close to where WTI started the year.
The poor week for equity and bond investors came on the back of mixed economic data. This past Thursday, S&P Global detailed their most recent Manufacturing and Service Purchasing Manager Indexes, or PMI’s. PMI’s are generally seen as good proxies for prospective growth in manufacturing and service activity, and this last month continued a trend of strong service relative measures, with the Services reading of 55.3 firmly in ‘expansionary’ territory. On the other hand, the Manufacturing reading of 47.8 continues to sit in ‘contractionary’ territory.
Third Quarter Earnings Season is well underway, with just over 180 stocks in the S&P 500 posting their results. Although still early, the index is on pace to grow earnings for the 5th quarter in a row, and just under 70% of all who have reported have detailed actual quarterly earnings growth as compared to a year ago. Looking ahead, this week 170 companies in the S&P 500 will detail their financial results.
In addition to several company earnings results, market participants will take in a slew of economic reports. On the 30th investors will get updates on the U.S. economy with the third quarter GDP report. Markets are expecting another solid report with current estimates at 3.0% growth. Finally on November 1st, investors will get updates on the U.S. labor market. Included in the labor report will be the number of established jobs added to the U.S. economy and updates on the unemployment rate. Currently markets are expecting 110,000 jobs added paired with a static unemployment rate of 4.1%.
That concludes this week’s Economic Beat. As always, we will be watching and reporting back to you next week.
