Last week, America eased into October as Wall Street eased into earnings season. Both tend to start on an optimistic note; what happens after that depends on whether reality decides to cooperate.
- U.S. stocks rose during the week, led by utilities, consumer staples, and energy, as investors briefly remembered that AI still requires electricity, food, and a functioning economy. The S&P 500 gained 1.15% and the Nasdaq rose 0.64%. Large caps beat small caps, and value outpaced growth across market cap ranges.
- Bonds posted gains during the week, although fixed income remained more stress test than spa day. The Bloomberg U.S. Aggregate Bond Index gained 0.39%. The 2-year U.S. Treasury yield eased to 4.79%, the 10-year slipped to 5.24%, and the 30-year edged down to 5.60%.
- Crude oil rose to $91.85 a barrel, gold climbed to $4,216 an ounce, and copper increased to $14,689 per metric ton, which is usually the market's way of saying “Growth sounds good, but let's keep the inflation concerns handy just in case.” Gasoline was the lone dissenter, easing to $4.77 a gallon.
- The U.S. dollar strengthened during the week, making overseas vacations 0.7% less terrifying while creating another challenge for U.S. exporters.
- The U.S. services economy kept growing…just with the energy of someone answering email from their bed. The Institute for Supply Management’s services purchasing managers’ index index fell to 54.9 in September from 55.4 in August. New orders eased to 59.8, while the prices-paid index rose to 74.0 from 72.6—a reminder that slower isn’t the same as cheaper.
- The U.S. trade deficit widened to $105.6 billion in August as imports outpaced exports, which is the sort of economic news that sounds either terrible or completely fine depending on how recently you've taken macroeconomics.
- American consumers put their credit card back in the wallet (or at least moved it to a less accessible pocket) in August. Consumer credit increased by $8.3 billion for the month, well below the $15 billion forecast.
- The U.S. labor market continues to follow the "you can check out any time you like, but you can never leave" model. Initial jobless claims fell 2,000 to 197,000 for the week ended October 3, while continuing claims rose to 1.716 million for the week ended September 26 from a revised 1.699 million.
- U.S. wholesalers sold more and still added inventory in August, proving that moving product and accumulating more product are not mutually exclusive goals. Ask any garage in America. Wholesale sales rose 1.8%, inventories increased 0.5%, and the inventory-to-sales ratio declined to 1.18 from a revised 1.19.
- The University of Michigan’s preliminary October consumer sentiment index fell to 46.3 from September’s 48.1, leaving the economy's approval rating somewhere between “root canal” and “group project.” Current conditions weakened sharply, while one-year inflation expectations rose to 4.6%.
- 3Q earnings season is just getting started, and Wall Street analysts are already being asked to surrender their dignity at the door. Eleven of the first 13 S&P 500 companies to report beat estimates. Analysts expect 3Q profit growth of 30.6%, making concerns about slowing profits feel a bit like complaining about legroom in first class.