Market Summary – October 23, 2023

Last Week’s Summary

  • S&P 500 Index fell 2.38%
  • International Equities fell 2.58%
  • Emerging Markets fell 2.69%
  • U.S. 10-Year Treasury Yield rose to 4.91%
  • Empire Manufacturing fell to -4.6
  • Initial Jobless Claims fell to 198k
  • Leading Index fell to -0.7%

What to Watch for This Week

  • M, 10/23/23 Chicago fed Nat Activity
  • T, 10/24/23 S&P Global U.S. Manufacturing PMI
  • W, 10/25/23 MBA Mortgage Apps, New Home Sales
  • Th, 10/26/23 Initial Jobless Claims, GDP, Durable Goods Orders
  • F, 10/27/23 Personal Income, Personal Spending, U. of Mich. Sentiment

Weekly Market Recap

Global financial markets experienced a significant shift due to concerns regarding the Israel-Hamas conflict potentially escalating into a broader Middle East conflict. Stock markets around the world saw declines, while bonds and gold saw increased demand as safe-haven assets.

The S&P 500 dropped by more than 2%, marking its worst performance in a month. It also breached the 200-Day Moving Average, which some chartists view as a bearish signal. The VIX, often referred to as Wall Street’s “fear gauge,” reached its highest level since March, reflecting increased market anxiety.

Traders sought refuge in assets like bonds as Treasury yields retreated, mitigating the intra-week’s increases that had pushed the 10-Year rate to nearly 5%. Beyond the Middle East crisis, global markets had been experiencing volatility due to rising Treasury yields and growing concerns about elevated interest rates persisting for an extended period.

Federal Reserve Bank of Cleveland President Loretta Mester mentioned that the U.S. central bank is approaching the conclusion of its tightening measures if the economy follows its expected trajectory. Currently, the market is pricing in just a 1.6% chance of a rate hike at the November 1st meeting, which means if there is to be a final hike in this cycle, the market is pushing it out to the final Fed meeting in December.

Additionally, traders monitored corporate earnings reports, with 74% of the 86 companies in the S&P 500 beating analysts’ profit estimates, compared to 78% during the same period the previous year. Oil prices pulled back after briefly reaching $90 a barrel.

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