Hope you are all doing well. The S&P 500 and the Dow fell around 1% and 3%, respectively, snapping a six-week string of positive results. The NASDAQ edged upward to post its seventh weekly gain in a row, lifted by strong results from technology stocks. Although its closing level on Friday didn’t break a record, the NASDAQ briefly hit an all-time intraday high earlier in the day. At Friday’s close, the index was 0.7% shy of the record close set three and a half months earlier. In contrast, the S&P 500 has largely been in record territory since mid-September. The World Series got underway this week. I have broken down this week’s update using some of the great Yankees vs Dodgers moments in the World Series.
Don Larsen’s Perfect Game – Game 5 1956
The housing market, like the Dodgers in that game, is struggling to get going. Real estate has been and continues to be a soft spot for the U.S. economy. The National Association of Realtors reported that sales of previously owned homes fell 1.0% in September. Compared with September 2023, sales were down more than 3.5%. Bond yields have not helped mortgage rates.
The yield of the 10-year U.S. Treasury note climbed for the fifth week out of the past six. Investors remain cautious about inflationary pressures and the pace of further interest-rate cuts. The yield of the 10-year note closed at 4.24% on Friday. That is up from 4.07% at the end of the previous week and well above a recent low of 3.62% on September 16.
Freddie Freeman’s Walk off Grand Slam – Game 1 2024
Like the Dodgers big bats coming through in the clutch, the market’s big bats (tech stocks) are expected to continue hitting it out of the park. It is for this reason I continue to favor large cap growth companies despite their elevated share prices. Near the midpoint of earnings season, it is expected that U.S. mega-cap technology stocks will generate a disproportionate share of overall earnings growth. Analysts expect that the group of stocks known as the Magnificent Seven (Apple, Microsoft, Meta, Nvidia, Alphabet, Amazon, Tesla) will generate average third-quarter growth of 18.1%. In contrast, the other 493 companies in the S&P 500 which are projected to produce growth of 0.1%.
Reggie Jackson hits 3 Home Runs – Game 6 1977
Reggie’s performance gave Yankee fans confidence they would win a championship in 1977. Similarly, the market’s performance has made consumers more confident. The U.S. consumer sentiment rose to the highest level in six months. Friday’s final reading from the University of Michigan’s Consumer Sentiment Index was 70.5, up from a preliminary number of 68.9 released a couple weeks earlier. The latest result marked the third monthly sentiment increase in a row.
If you’d like to speak about your investments or your plan, my calendar link is below and you can schedule a phone or zoom appointment.
