Stock Market Overview for the Week Ending October 11, 2024

The stock market continued its string of gains this past week, with major indexes reaching new highs, powered by economic data surprises and the start of the Q3 earnings season. Here's a closer look at how the markets performed and what drove the movement:

U.S. Stock Performance

• S&P 500: Up 1.07% for the week, reaching a new record high. The index has gained an impressive 21.86% year-to-date, reflecting strong corporate earnings and optimism around the U.S. economy.
• Nasdaq Composite: Led the gains among major indexes, rising 1.15% for the week and an impressive 22.22% year-to-date, driven by the continued strength of tech stocks.
• Dow Jones Industrial Average: Also posted a solid weekly gain of 1.10%, now up 13.60% in 2024.

Despite choppy trading early in the week, stronger-than-expected U.S. jobs data for September reassured investors that the U.S. economy remains resilient. The addition of 254,000 new jobs last month exceeded expectations and stoked optimism for a possible soft landing, meaning that the Federal Reserve might not need to aggressively tighten policy further.

Corporate Earnings Kickoff

The third-quarter earnings season kicked off with strong results from major banks, including JPMorgan Chase, Wells Fargo, and Bank of New York Mellon, all of which reported better-than-expected earnings. Investors reacted positively to upbeat commentary from these financial giants, pushing financial stocks higher and contributing to the broader market gains.

However, inflationary data released mid-week created some turbulence. The Consumer Price Index (CPI) came in hotter than expected on Thursday, briefly pulling markets lower as investors recalibrated their expectations for Federal Reserve rate cuts. Treasury yields also rose during the week, with the 10-year yield nearing 4%, reflecting the market’s anticipation of the Fed's next move.

Sector Highlights

• Information Technology: Led the market with a 2.52% gain for the week, maintaining its strong year-to-date lead with a 32.21% increase. The AI boom continues to drive tech stocks higher, though some investors remain cautious about whether current valuations are sustainable.
• Financials: Gained 1.74% for the week, bolstered by the strong earnings reports from major banks. Year-to-date, financials are up 23.39%.
• Energy: While oil prices climbed, the energy sector saw a modest decline of 0.19% for the week. The recent rise in oil prices, driven by geopolitical tensions in the Middle East, could continue to impact energy stocks moving forward.

International Markets

• Europe: Stocks in Europe closed slightly higher for the week, driven by hopes of potential interest rate cuts from the European Central Bank (ECB). However, concerns about China’s economic slowdown and weak holiday spending data kept a lid on gains.
• Asia: Chinese stocks struggled throughout the week after disappointing economic press briefings and weak consumer spending. The lack of further stimulus measures from China’s government weighed on investor sentiment, while Japanese stocks ended higher, buoyed by gains in tech shares.

Outlook

As earnings season continues, investors will closely watch corporate profit reports to gauge the health of the U.S. economy and the global markets. Key inflation data, such as the Consumer Price Index (CPI) and Producer Price Index (PPI), will continue to play a crucial role in shaping Federal Reserve policy expectations. With markets still optimistic about a soft landing for the U.S. economy, volatility remains a possibility, especially given the elevated geopolitical risks and upcoming U.S. election season.

In summary, the week ended with positive gains across U.S. indexes, but rising bond yields, inflation data, and the Fed's next moves will keep investors cautious in the near term. Expect more market movement as earnings season unfolds and more economic data is released