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 S&P 500 closed at a fresh all-time high on Friday, rising for a 5th consecutive week, its longest weekly winning streak since 2024. This brings the index up +15% since the March 30 low, also marking April as the best month for stocks since November 2022. Stocks largely shrugged off the stream of sometimes conflicting headlines about the war in the Middle East and a surprisingly hawkish Federal Reserve policy meeting to post solid gains in most major indexes. Large-cap stocks outpaced small-caps, and value outperformed growth. Five of the “Mag 7” companies reported earnings, with financial results generally meeting or exceeding expectations for these bellwether firms. Meanwhile, major central banks keep rates on hold amid war uncertainty.


