November 4, 2024

Market Commentary

Weekly Market Commentary November 4-8, 2024

By: Greg Lai and Alex Hsaio, Co-Chief Investment Officers

Well, in the world of Wall Street, it’s not always smooth sailing, and this past week proved just that. Corporate earnings and rising bond yields joined forces to weigh down the markets, sending the S&P 500 to its second straight week of losses, dropping 1.35%. By the time October wrapped up, the index had shed 0.91% for the month.

Now, don’t get us wrong—there were some bright spots. Alphabet, aka Google, knocked it out of the park like World Series MVP Freddie Freeman, smashing earnings expectations by nearly 16% and posting $2.12 in earnings per share, up a staggering 37% from last year. But for the other tech giants—Apple, NVIDIA, Microsoft, and Meta—the story wasn’t quite so rosy. Despite exceeding earnings expectations, concerns over their forward guidance on capital expenditures cast a shadow. Investors got jittery, fearing that significant increases in capex and AI spending could squeeze profit margins.

Jobs data was a mixed bag, with the unemployment rate steady at 4.1%, but inflation remained stubborn. The Core PCE Price Index stayed flat from the previous month but still clocked in at a hotter-than-expected 2.7%. This dented some hopes for a Fed rate cut as we head into the upcoming FOMC meeting – the last FOMC dot-plot projects another half-percentage cut. As a result, bond yields crept higher, with the 10-year Treasury yield rising by 12 basis points to 4.37%.

The bond market wasn’t immune to the pressure either, with the Bloomberg U.S. Aggregate Bond Index losing 0.61% for the week, bringing its monthly loss to 2.48%.

Looking ahead, corporate earnings from retail, energy, and industrial sectors will dominate the headlines, but all eyes will be on Tuesday’s election results and the highly anticipated FOMC meeting on Thursday. Investors will be hanging on every word to see how the Fed plans to navigate the economic landscape as we march toward 2025. Just because the market’s a little jittery because of the election doesn’t mean we’re sinking. Sometimes you’ve got to weather a few storms to reach the sunny shores ahead!

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