Equity Markets Ended Last Week Mostly Lower

Wall Street saw stocks end October with a whimper, although equities began November on a high note. Each of the major benchmark indexes closed last week lower, except the Russell 2000. A surprisingly weak jobs report at the end of the week was offset by solid earnings reports from a couple of tech giants. Analysts speculated that the October labor data was impacted by hurricane disruptions and a strike at a major airplane manufacturer. Consumer discretionary and communication services were the only market sectors to end the week higher. Utilities, real estate and information technology fell the furthest. Ten-year Treasury yields reached the highest rate in nearly four months as the latest economic data favored a slightly more hawkish Federal Reserve.

Third-Quarter GDP and October Employment Data Released

According to the initial estimate, third-quarter gross domestic product (GDP) increased at an annual rate of 2.8%. In the second quarter, GDP advanced 3.0%. The increase in GDP primarily reflected increases in consumer spending (3.7%), exports (8.9%) and federal government spending (9.7%). Imports, which are a subtraction in the calculation of GDP, increased 11.2%. The Personal Consumption Expenditures (PCE) Price Index increased 1.5%, compared to an increase of 2.5% in the second quarter. Excluding food and energy prices, the PCE Price Index increased 2.2% (2.8% in the second quarter).

Employment was essentially unchanged (+12,000) in October after adding 223,000 (revised) new jobs in September. The average monthly gain over the prior 12 months was 194,000. According to the latest report from the Bureau of Labor Statistics, Hurricanes Helene and Milton may have impacted the collection and accuracy of data in October. These measures are higher than a year earlier, when the jobless rate was 3.8%, and the number of unemployed people was 6.4 million. The change in total employment for August was revised down by 81,000, and the change for September was revised down by 31,000. With these revisions, employment in August and September combined was 112,000 lower than previously reported.

Eye on the Week Ahead

As we enter the first full week of November, attention will be drawn to Tuesday’s election. Beyond the election, the week is relatively quiet in terms of major economic data releases. The primary focus will be on the Federal Reserve’s policy rate decision and subsequent statement on Nov. 7. The Fed lowered the federal funds target range 50.0 basis points in September, to 4.75%-5.00%.