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The Markets – October 21st, 2024
IN THE MARKETS
The S&P 500 Index advanced, led by gains in the utilities and real estate sectors, while energy stocks declined as oil prices retreated due to easing concerns over potential Israeli attacks on Iran’s oil and gas infrastructure. Smaller stocks performed particularly well, with the small-cap Russell 2000 Index and the S&P MidCap 400 Index outperforming. After a slow start to the week, the Nasdaq Composite rallied on Friday, buoyed by strong quarterly results from Taiwan Semiconductor Manufacturing, which revived interest in AI-related stocks. The Nasdaq also benefited from positive earnings surprises from companies like Netflix, which reported better-than-expected subscriber growth and expanded operating margins in the third quarter. U.S. Treasuries posted modest gains despite fluctuations, with yields on intermediate- and long-term bonds rising on Thursday before falling again due to weaker housing data. Meanwhile, there was heavy issuance in the bank loan market, driven by repricing announcements and strong demand for discounted, higher-coupon loans.
U.S. MARKETS
DOW & TECH
The Dow ended the week up 0.96% at 43,275.91 vs the prior week of 42,863.86.
The tech-driven Nasdaq ended the week up 0.80%, closing at 18,489.55 vs. the prior week of 18,342.94.
BY MARKET CAP
- Large-Cap: The S&P 500 ended the week up 0.85%, closing at 5864.67 compared to last week’s 5815.03.
- Mid-Cap: The S&P 400 mid-cap ended the week up 1.41%, closing at 3198.21 compared to last week’s 3153.59.
- Small-Cap: The Russell 2000 ended the week up 1.87%, closing at 2276.09 compared to last week’s 2234.41.
U.S. COMMODITIES / FUTURES OVERVIEW
THE VOLATILIY INDEX for 2024 (VIX)
VIX closed at 18.03 this week, a 11.9% decrease vs last week’s close of 20.46
INTERNATIONAL MARKETS
U.S. MARKET NEWS
Consumer spending up, jobless claims down:
In September, consumer spending showed strength as U.S. retail sales rose 0.4%, an improvement from August’s 0.1% increase and slightly above the 0.3% consensus estimate. The growth in consumer spending was broad, with 10 out of 13 retail categories reporting higher sales, and a measure excluding auto, building materials, food services, and gas stations rose 0.7%, marking the fastest pace in three months. However, industrial production declined by 0.3% in September, reversing the 0.3% increase seen in August, with the Federal Reserve attributing the weakness to the impact of Hurricanes Francene and Helene, as well as an aircraft machinist strike at Boeing. In the labor market, initial jobless claims fell unexpectedly to 241,000 for the week ending October 12, a decrease of about 19,000 despite an earlier spike due to disruptions from Hurricane Helene, while continued jobless claims increased slightly to 1.867 million, below expectations.
INTERNATIONAL MARKET NEWS
EUROPE
The pan-European STOXX Europe 600 Index rose 0.58% in local currency terms, driven by the European Central Bank’s (ECB) second consecutive interest rate cut, which fueled expectations of further monetary easing. Major stock indexes also advanced, Germany’s DAX gaining 1.46%, France’s CAC 40 adding 0.46%, and the UK’s FTSE 100 rising 1.27%. The ECB cut its key deposit rate by 0.25 percentage points to 3.25%, marking the first back-to-back reductions in 13 years, with President Christine Lagarde noting that the disinflationary trend was progressing. Despite not committing to a specific rate path, markets anticipate another rate cut in December. Eurozone inflation was revised down to 1.7% in September, below the ECB’s 2% target, with expectations of a temporary rise before stabilizing next year. In the UK, inflation dropped to 1.7%—the lowest since April 2021—and wage growth slowed, raising the possibility of further rate cuts by the Bank of England (BoE). Services inflation fell to a two-year low of 4.9%, mainly due to lower transport costs. Wage growth slowed to 4.9% over the three months through August, indicating easing pay pressures, while labor market data pointed to a potential loosening, with declines in payroll employment and job openings.
JAPAN
Japan’s stock markets declined in local currency terms, with the Nikkei 225 Index dropping 1.58% and the TOPIX Index down 0.64%, as easing domestic inflation in September led to speculation that the Bank of Japan (BoJ) may hold off on further interest rate hikes this year. BoJ officials indicated that conditions for beginning monetary policy normalization have been met, with Board Member Seiji Adachi noting widespread price increases, but emphasized a cautious approach to rate hikes due to uncertainties around the global economy and domestic wage growth. The yield on the 10-year Japanese government bond rose slightly to 0.97% from 0.94% the previous week. Meanwhile, the yen weakened against the U.S. dollar, moving to the higher end of the JPY 149 range. Japan’s top currency diplomat, Atsushi Mimura, characterized the yen’s recent movements as “somewhat one-sided and rapid” and signaled that authorities are closely monitoring exchange rate developments, particularly speculative activity, as the yen nears levels that previously prompted intervention.
CHINA
Chinese equities rose as the central bank introduced additional support measures in response to growing deflationary pressures in the economy. The Shanghai Composite Index climbed 1.36% in local currency terms, and the blue-chip CSI 300 increased 0.98%, while Hong Kong’s Hang Seng Index fell 2.11%, according to FactSet. China’s economy expanded 4.6% year-over-year in the third quarter, surpassing consensus estimates but falling short of the government’s target of “around 5%” and slightly below the 4.7% growth recorded in the second quarter. Quarter-over-quarter, the economy grew 0.9%. Other economic indicators showed improvement, with industrial production rising 5.4% in September, up from 4.5% in August, and retail sales growing 3.2% year-over-year, driven in part by increased sales of household appliances.
HIGHLIGHTED STORY
https://www.visualcapitalist.com/ranked-top-countries-by-gdp-per-hour/
October 16, 2024
What We’re Showing:
This chart ranks countries by GDP per hour worked, or their labor productivity. Data is sourced from the International Labour Organization, as of 2023. Labor productivity measures the amount of output (GDP) produced per unit of labor (hours worked) over a specific time period. It’s measured in International dollars (Int$), a hypothetical currency used to compare the purchasing power of different countries by adjusting for price differences. This helps evaluate GDP relative to labor input and offers insights into human capital efficiency and production quality. In the long term, increasing productivity is key to economic growth.
Key Takeaways
Workers in Luxembourg are nearly 3x more productive than in Qatar, due to the country’s strong financial services sector, which generates significant output with relatively fewer people. Nine out of the first 10 countries ranked on this list are located in Europe, with Singapore the only outlier. Europeans work fewer hours than American workers to achieve similar output levels on a per capita basis. Many rich European countries also have smaller populations, with workers concentrated in high-value-added industries (like financial services or energy), which contribute to higher per capita rates. Relatedly, the EU also implements strong worker protections and has some of the highest mandatory paid time off days, which may help work-life balance and productivity. However, how the data is sliced can change these rankings. For example, in 2022 a German working hour was 1% more productive than a U.S. working hour, however a German employee produced 20% less than an American employee over the course of the year.