The Weekly Wire: Market Streak Breaks as Investors Brace for Election, Earnings, and Economic Data

Last week, the S&P 500 ended its six-week winning streak, marking the first time in seven weeks that both the stock and bond markets saw losses. The S&P dipped nearly 1%, while the 10-year Treasury yield surged to 4.25% at its high point last week, up from a low of 3.6% just six weeks prior. Growth stocks bucked the trend, however, with the NASDAQ posting a slight gain last week and reaching new all-time highs, helped by a strong finish last Friday after Tesla’s positive earnings report. Commodities and the U.S. dollar also saw gains last week.

Looking ahead, this week’s news will be dominated by the “3 Es”: election, earnings, and economic data.

• Election: With less than two weeks until the presidential election and the race nearly tied, any significant development could spark volatility. On that point, please keep in mind the counsel of Orion’s Chief Behavioral Officer, Dr. Daniel Crosby, who offers important pre-election reminders including: 
  
  1.  Do not let election stress take the wheel in driving your financial decisions: the market historically yields positive results over time,
  
  2. Do not become overly focused on short-term market movements that will not serve your long-term objectives.
  
  3. Do not fall victim to “action bias,” thinking that if you react quickly and do more, you will have more impact.
   
• Earnings: We spoke too soon last week last week as this week is the peak of the Q3 earnings season, with over one-third of S&P 500 companies reporting this week. This includes key releases from five of the "Magnificent 7” - Alphabet (Google), Amazon, Microsoft, Apple, and Meta (Facebook) — set to release results. With approximately 40% of earnings reports already in, year-over-year growth is currently estimated just below 4%, marking five consecutive quarters of growth but at the slowest pace since Q3 of last year.
   
• Economic Data: Major reports this week include employment, inflation, and GDP. The first Q3 GDP estimate is due Wednesday, with a projected growth rate of 3.0%. On Thursday, we get the “Fed’s favorite inflation measure,” core PCE. This inflation measure, which measures personal consumption expenditures minus food and energy costs, is expected to be 2.6% year-over-year, down from 2.7% last month. On Friday, the monthly employment data will be released, with forecasts for 125,000 new jobs and an unemployment rate of 4.1%, though hurricanes, strikes, and election uncertainty may impact the numbers.
   

Bottom line: While significant news and potentially sensational headlines are on the horizon, the best course is to...
 

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!

Key Data

Stocks, Bonds, Alternatives, and Real Assets as of October 25, 2024

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 25, 2024

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

Key Economic Data Last Week

Source: MarketWatch,  First Trust

Key Economic Data This Week

Source: MarketWatch