Market Summary – October 2, 2023

Last Week’s Summary

  • S&P 500 Index fell 0.71%
  • International Equities fell 1.34%
  • Emerging Markets fell 1.16%
  • U.S. 10-Year Treasury Yield rose to 4.57%
  • U. of Mich. Sentiment rose to 68.1
  • U. of Mich. 1-Year Inflation rose to 3.2%
  • Initial Jobless Claims rose to 204k
  • Personal Income rose to 0.4%
  • Personal Spending fell to 0.4%

What to Watch for This Week

  • M, 10/2/23 S&P Global U.S. Manufacturing PMI, ISM Manufacturing
  • W, 10/4/23 MBA Mortgage Apps, ADP Employment Change, Factory Orders, Durable Goods Orders
  • Th, 10/5/23 Initial Jobless Claims, Trade Balance
  • F, 10/6/23 Change in Nonfarm Payrolls, Unemployment Rate

Weekly Market Recap

As Friday rounded out the end of the third quarter, U.S. stock indices and Treasury bonds experienced their worst quarterly performance since September 2022. This market turbulence was primarily driven by the resounding message from Federal Reserve officials: brace for higher interest rates.

This has driven the U.S. Dollar to strengthen against all G7 currencies throughout the quarter and help domestic equities manage a small victory over their international competition. The anxiety in the bond market pushed yields on the 10-Year Benchmark to their highest levels since 2007, with the 30-Year Bond reaching levels reminiscent of 2010.

Market optimism waned as traders grappled with the potential of a government shutdown and the persistent reality of historically elevated interest rates. While New York Fed President John Williams’ hawkish stance suggested that interest rate hikes might be on hold, it’s clear that the central bank will need to maintain elevated rates to combat inflation and return it to the target of 2%.

Consequently, the July-September quarter proved to be the most challenging for MSCI’s All-Country Index since September 2022, driven by concerns surrounding inflation and economic growth, exacerbated by surging oil prices.

Notably, crude oil recorded its most substantial quarterly gain since March 2022. Looking ahead to the first week of the final quarter of the year, market participants eagerly anticipate fresh job data, hoping for clarity on whether the market can anticipate a final rate hike before the year’s end.

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