Welcome to Election Week—it’s finally here. Perhaps in part a pause ahead of Tuesday’s election, but last week the overall stock and bond markets finished lower. The S&P closed out October with a loss for the second month in a row. However, since August 7th, the S&P is still up about 12% and is heading into the election with nearly a 20% return, marking its best performance in an election year since 1932. Meanwhile, the bond market, as represented by the 10-year Treasury, has seen interest rates rise for seven consecutive weeks. Commodity prices also declined last week, though notably, both gold and Bitcoin were up, each reaching new all-time highs.

Alongside a record barrage of election ads, last week was packed with earnings and economic data. On the earnings front, it was a good week, especially for some of the “Magnificent 7” stocks, including Amazon and Alphabet (Google). Year-over-year growth for the S&P 500 is now over 5%, and if this holds, it will be the fifth consecutive quarter of positive earnings growth.

As for economic data, the week was mildly disappointing but not enough to shift any major market narratives. Inflation, measured by the core PCE index, came in closer to 3% than the Fed’s target of 2%, but this was largely expected. The manufacturing sector continued to show weakness through the ISM report. Employment data also came in on the weaker side but was largely discounted by investors due to recent hurricanes, strikes, and election uncertainty.

This week, of course, is all about the election. The results (hopefully) will likely shape market narratives in the weeks and months to come. This week also brings the Federal Reserve’s next meeting, where they are widely expected to cut short-term interest rates by another twenty-five basis points (1/4 of 1%). And although the earnings season is now over 70% complete, we will still see a few key reports this week, though they may be overshadowed by election news.

One more report from last week that could have market implications moving forward: the Conference Board reported a jump in consumer confidence to a nine-month high. This boost in sentiment was largely driven by increased optimism about the U.S. stock market’s future. Over 50% of consumers surveyed expect stock prices to rise over the next year, the highest such reading since records began in 1987. This optimism is reflected in portfolios as U.S. households currently hold 48% of their assets in stocks—the highest level since the Dot-Com bubble peak. While this year’s gains have rewarded investors, a contrarian might note that when sentiment and stock holdings reach such highs, history suggests below-average returns often follow.

Bottom line, 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!


 

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Key Data

Stocks, Bonds, Alternatives, and Real Assets as of November 1, 2024

Security Name

Risk Score

1 Wk

1 Mo

QTD

YTD

1 Yr

3 Yr Ann.

Global Equities (60% US, 40% Intl)

100

-1.07%

-1.47%

-2.13%

15.77%

31.76%

5.56%

S&P 500 Total Return

102

-1.35%

0.44%

-0.50%

21.47%

37.15%

9.17%

Dow Jones Industrial Average

97

-0.15%

-0.16%

-0.57%

13.28%

28.88%

7.58%

NASDAQ 100 Total Return

122

-1.55%

1.35%

-0.10%

19.85%

37.75%

8.90%

TV Benchmark

107

-1.02%

0.54%

-0.39%

18.20%

34.59%

8.55%

Morningstar US Large Cap

102

-1.34%

0.77%

-0.23%

23.59%

38.71%

9.60%

Morningstar US Mid Cap

113

-0.92%

-0.06%

-0.69%

13.76%

34.14%

3.55%

Morningstar US Small Cap

125

-0.06%

0.65%

-0.40%

10.04%

32.63%

1.54%

Morningstar US Value

98

-0.62%

-0.54%

-0.81%

15.42%

29.88%

9.50%

Morningstar US Growth

126

-0.87%

2.73%

1.33%

17.63%

39.25%

0.30%

MSCI ACWI Ex USA 

98

-1.06%

-4.38%

-4.66%

9.36%

24.26%

1.92%

MSCI EAFE 

101

-1.04%

-4.76%

-5.29%

7.50%

22.45%

2.88%

MSCI EM

98

-1.09%

-4.23%

-4.09%

12.45%

26.14%

-0.90%

Bloomberg US Agg Bond Index

27

-0.61%

-3.20%

-2.92%

1.40%

8.99%

-2.31%

Bloomberg Commodity Index

70

-2.08%

-2.80%

-1.87%

3.88%

-0.77%

2.05%

Wilshire Liquid Alternative Index

25

-0.23%

-0.74%

-0.85%

5.42%

9.79%

1.72%

US Dollar

10

-0.08%

3.17%

3.17%

2.61%

-2.52%

3.37%

Bloomberg US Treasury Bill 1-3mo

1

0.10%

0.43%

0.44%

4.54%

5.47%

3.72%

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 November 1, 2024

Rate

This Week

1 Wk Δ%

13-Wk Treasury Yield

4.40%

-0.11%

10-Yr Treasury Yield

4.36%

0.13%

Bloomberg US Agg Yield

4.83%

0.09%

Avg Money Mkt Yield

4.65%

-0.01%

Avg 30-Yr Mortgage Rate

6.74%

0.17%

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

 

 

Key Economic Data Last Week

Data Point

Expectation

Actual

Job Openings

8.0M

7.44M

ADP Employment

113,000

233,000

Q3 GDP

3.1%

2.8%

Personal Income

0.3%

0.3%

PCE YoY

2.1%

2.1%

Core PCE YoY

2.6%

2.7%

Nonfarm Payrolls

110,000

12,000

US Unemployment Rate

4.1%

4.1%

ISM Manufacturing

47.6%

46.5%

Source: MarketWatch,  First Trust

 

 

Key Economic Data This Week

Data Point

Expectation

Release Date

ISM Services

53.7%

11/5/24

FOMC Interest Rate Decision

25bp Cut

11/7/24

Consumer Credit

14.0B

11/7/24

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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