WEEKLY SUMMARY: A Big week for Bonds, Bullion & Black Gold
The major US equity indexes ended mixed as investors weighed inflation data against dovish signals from Fed officials. Large-cap value stocks outperformed, helped by earnings beats from Citigroup, Wells Fargo, and JPMorgan Chase. The banking giants kicked off the unofficial start to Q3 earnings reporting season. The prospect of a widening war in the Middle East boosted energy shares and defense stocks while weighing on airlines and cruise operators. Investors’ sentiment appeared to get a boost at the start of the week, after Fed Vice Chair Philip Jefferson told an economics conference in Dallas that he was mindful that the rise in long-term bond yields might affect the need for future rate hikes. The Wednesday release of the minutes from the Fed’s September policy meeting seemed to confirm the shift in official thinking because of higher yields. Slightly hotter-than-expected inflation readings did not seem to sway investor expectations for the Fed’s next move, perhaps due to expectations that officials might also weigh the added uncertainty from the war between Hamas and Israel. Bonds were bid with the long-end dramatically outperforming but 2-year yields bounced back above 5.00%, flattening the yield curve (2s30s) dramatically on the week. Gold surged over 5% this week after the attacks on Israel - its biggest weekly jump since March - sending spot prices back above $1900. Oil prices also soared with WTI up over 5% on the week (its second biggest weekly gain since April)...
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The Nasdaq Composite reached record intraday highs on Wednesday before falling back sharply on Thursday. Over the week, growth stocks generally lagged value shares. Small-caps also held up much better than large-caps. 42% of the companies in the S&P 500 Index reported their Q3 earnings over the week, including five of the Mag 7. Microsoft and Apple were the biggest losers of the week whereas Amazon and Google gained. On the macro side, the Labor Department reported “essentially unchanged” nonfarm payrolls over the month, with employers adding only 12,000 jobs—the lowest number since December 2020. It included a decline of 44,000 jobs due to the Boeing strike.