Last week, the U.S. stock market managed to eke out a small gain, driven largely by a strong employment report released on Friday. Investor sentiment was also boosted by the resolution of the first U.S. East Coast port strike since 1977, which ended after just three days. However, concerns over the Middle East contributed to market volatility earlier in the week.

The bond market, in contrast, continued to struggle as prices fell and yields rose. The U.S. 10-year Treasury yield closed just under 4%, up by a quarter of a percentage point. A key driver was a 2% rise in commodities, with crude oil prices surging nearly 10% due to the ongoing Middle East conflict. The U.S. dollar also strengthened last week amid geopolitical tensions, leading to underperformance in developed international stocks. Despite the stronger dollar, emerging markets slightly outperformed the U.S. stock market.

The highlight of the week was Friday’s unexpectedly strong labor data. Nonfarm payrolls grew by 254,000 in September, significantly exceeding the expected 150,000. Additionally, prior months’ figures were revised upward, and the unemployment rate ticked down to 4.1% from 4.2% in August. Notably, average hourly earnings are now up 4% compared to a year ago.

Looking ahead, this week brings key inflation updates with Thursday’s Consumer Price Index (CPI) and Friday’s Producer Price Index (PPI) reports. Economists expect headline inflation to have risen 2.3% year-over-year in September, down from 2.5% in August, the slowest reading since early 2021. Core CPI, which excludes food and energy, is forecast to rise 3.2% over the past year, unchanged from August. If inflation continues to trend downward, it could pave the way for additional interest rate cuts by the Federal Reserve. However, last week’s strong labor data suggests that future rate cuts may not need to be as deep or as swift as previously anticipated.

This week also marks the start of the third-quarter corporate earnings season, with several major financial institutions set to report. Consensus expectations are for year-over-year earnings growth of 4.7%, marking the fifth consecutive quarter of gains, though it would be the slowest growth rate since Q4 of last year.

With just four weeks until the Presidential Election, the race remains tight, and the possibility of "October Surprises" looms large, which could lead to increased market volatility in the weeks ahead.

Speaking of surprises, despite the sensational headlines and market turbulence in recent months, investors may be pleasantly surprised when they receive their quarterly reports. It has been an exceptionally strong year-to-date and one-year period for returns, with globally balanced portfolios of stocks and bonds recently reaching new all-time highs.

Add it all up...

Stay invested. Stay diversified. Stay disciplined.

 

If you have any questions or comments, please let us know at strategists@brinkercapital.com or at rusty@orion.com. Thank you for your time and trust. See you next week!


 

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Key Data

Stocks, Bonds, Alternatives, and Real Assets as of October 4, 2024

Security Name

Risk Score

1 Wk

1 Mo

QTD

YTD

1 Yr

3 Yr Ann.

Global Equities (60% US, 40% Intl)

100

-0.78%

4.00%

-0.61%

17.57%

33.05%

8.20%

S&P 500 Total Return

102

0.26%

4.32%

-0.17%

21.87%

36.89%

11.91%

Dow Jones Industrial Average

97

0.13%

3.48%

0.09%

14.03%

30.42%

9.83%

NASDAQ 100 Total Return

122

0.15%

5.98%

-0.11%

19.84%

36.73%

12.39%

TV Benchmark

107

0.18%

4.59%

-0.06%

18.58%

34.68%

11.38%

Morningstar US Large Cap

102

0.36%

4.56%

-0.11%

23.73%

38.67%

12.37%

Morningstar US Mid Cap

113

-0.06%

3.89%

-0.20%

14.31%

31.34%

6.10%

Morningstar US Small Cap

125

-0.20%

4.17%

-0.35%

10.10%

29.24%

3.70%

Morningstar US Value

98

0.33%

1.56%

-0.05%

16.31%

30.22%

11.08%

Morningstar US Growth

126

-0.04%

5.81%

-0.09%

15.98%

34.32%

3.45%

MSCI ACWI Ex USA 

98

-2.20%

3.61%

-1.17%

13.36%

28.63%

4.57%

MSCI EAFE 

101

-3.73%

0.62%

-2.24%

10.95%

26.83%

5.54%

MSCI EM

98

0.42%

10.11%

0.73%

18.10%

30.88%

1.51%

Bloomberg US Agg Bond Index

27

-0.25%

0.58%

-0.28%

4.15%

12.92%

-1.57%

Bloomberg Commodity Index

70

1.90%

8.02%

1.78%

7.74%

5.92%

3.83%

Wilshire Liquid Alternative Index

25

-0.45%

0.89%

-0.38%

5.92%

10.30%

2.21%

US Dollar

10

1.07%

0.16%

1.20%

0.65%

-4.68%

2.74%

Bloomberg US Treasury Bill 1-3mo

1

0.08%

0.47%

0.07%

4.16%

5.53%

3.60%

Source: Morningstar

The TV Benchmark represents an average of the S&P 500, Dow Jones IA, and NASDAQ 100 return indexes. The Orion Risk Score represents risk relative to the global equity market.

 

 

Interest Rates as of October 4, 2024

Rate

This Week

1 Wk Δ%

13-Wk Treasury Yield

4.51%

0.03%

10-Yr Treasury Yield

3.98%

0.23%

Bloomberg US Agg Yield

4.51%

0.24%

Avg Money Mkt Yield

4.74%

-0.02%

Avg 30-Yr Mortgage Rate

6.21%

0.00%

Sources: Yahoo Finance, S&P Global, Crane Data, BankRate

 

 

Key Economic Data Last Week

Data Point

Expectation

Actual

ISM Manufacturing

47.5%

47.2%

ADP Employment

128,000

143,000

ISM Services

51.8%

54.9%

US Nonfarm Payrolls

150,000

254,000

US Unemployment Rate

4.2%

4.1%

Sources: MarketWatch, First Trust

 

 

Key Economic Data This Week

Data Point

Expectation

Release Date

Consumer Credit

$12.0B

10/7/24

Consumer Price Index (CPI) YoY

2.3%

10/10/24

Core CPI YoY

3.2%

10/10/24

Producer Price Index (PPI) YoY

--

10/10/24

Core PPI YoY

--

10/11/24

Source: MarketWatch

 

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The views expressed herein are exclusively those of Orion Portfolio Solutions, LLC d/b/a Brinker Capital Investments, a registered Investment Advisor, and are not meant as investment advice and are subject to change. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation, and the particular needs of any specific person.
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