Last week, the markets experienced a decline due to the rise in bond yields and the uncertainty surrounding the end of the Fed's rate-hike cycle, despite the positive corporate earnings results. The Dow Jones Industrial Average decreased by 1.61%, the Standard & Poor's 500 by 2.39%, and the Nasdaq Composite index, which has been leading for most of the year, by 3.16%. The MSCI EAFE index, which tracks developed overseas stock markets, also fell by 1.67%.
Rising Yields Sink Stocks
Stocks started the week strong on the back of positive earnings news but lost momentum due to concerns over rising bond yields. As traders speculated that strong economic data could lead to a rate hike by the Fed, yields rose, causing stocks to turn lower by mid-week. This dip was further exacerbated by the 10-year Treasury yield crossing above 4.9%, marking the first time it had done so since 2007. To add to this, mortgage rates hit 8%, the highest level since mid-2000.
On Thursday, stocks further declined as the 10-year Treasury yield moved closer to 5%, and Fed Chair Powell's comments about high inflation added to the pressure. As the 10-year Treasury yield crossed above the 5% mark on Friday, and with uncertainty in the Middle East over the weekend, stocks weakened further. The week ended on a negative note, with stocks experiencing a downward trend.
Economic Strength, Housing Weakness
Last week's data release showed that the economy displayed remarkable strength. Despite concerns about a weak consumer, retail sales increased by 0.7% in September, surpassing the expected 0.3% rise. Additionally, industrial output increased by 0.3%, exceeding the forecast of a 0.1% gain.
There were also updates on the state of the housing market. Housing starts rebounded by 7.0% from August, although permits, which are an indicator of future housing starts, declined by 4.4% month-over-month. However, existing home sales were weak, decreasing by 2.0% from August and 15.4% from a year ago. It looks like existing home sales are on track to record their slowest year since 2011.
This Week: Key Economic Data
Tuesday: Purchasing Managers’ Index (PMI).
Wednesday: New Home Sales.
Thursday: Gross Domestic Product (GDP). Durable Goods Orders. Jobless Claims.
Friday: Personal Income and Outlays. Consumer Sentiment.
Source: Econoday, October 20, 2023
This Week: Companies Reporting Earnings
Tuesday: Microsoft Corporation (MSFT), General Electric Company (GE), Verizon Communications, Inc. (VZ), Alphabet, Inc. (GOOGL), General Motors Company (GM), The Coca-Cola Company (KO), 3M Company (MMM), Texas Instruments, Inc. (TXN), HCA Healthcare, Inc. (HCA), NextEra Energy, Inc. (NEE), Kimberly-Clark Corporation (KMB), The Sherwin-Williams Company (SHW), Danaher Corporation (DHR), PulteGroup, Inc. (PHM)
Wednesday: The Boeing Company (BA), International Business Machines Corporation (IBM), ServiceNow, Inc. (NOW), Themo Fisher Scientific, Inc. (TMO), General Dynamics Corporation (GD), O’Reilly Automotive, Inc. (ORLY), T-Mobile US, Inc. (TMUS)
Thursday: Amazon.com, Inc. (AMZN), Intel Corporation (INTC), Ford Motor Company (F), Mastercard, Inc. (MA), Merck & Co., Inc. (MRK), Northrop Grumman Corporation (NOC), United Parcel Service, Inc. (UPS), Comcast Corporation (CMCSA), Honeywell International, Inc. (HON)
Friday: AbbVie, Inc. (ABBV), Exxon Mobil Corporation (XOM), Chevron Corporation (CVX), Colgate-Palmolive Company (CL)
Source: Zacks, October 20, 2023
Food For Thought
"Each day will be triumphant only when your smiles bring forth smiles from others."
– Og Mandino
Gig Economy Tax Tips
There are some essential tips to remember if you work as a gig worker:
If you work as a gig worker, there are some essential tips you need to remember. Firstly, all income is taxable, whether you receive information returns or not. It includes full-time and part-time work and also the payments made in cash.
Please note that this information is not intended to replace specific individualized tax advice. We recommend discussing your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov8
Healthy Living Tip
Boost Your Productivity With These Tips
Take regular breaks. It seems counterintuitive, but most people are more productive when they take frequent breaks.
Do the challenging tasks first. Mark Twain famously said to "eat the frog first thing in the morning," meaning you should tackle your most difficult task immediately.
Make two to-do lists: one with your weekly goals and objectives and one with your daily tasks.
Divide large projects into manageable steps. Make the things on your to-do list specific so you can continue to cross things out and make progress.
Tip adapted from Formstack9
How many cubic yards of dirt are in a hole 9' deep, 8' long, and 1' wide?
Last week’s riddle: I'm usually made by someone who does not want me. I'm usually bought by someone who does not need me. I'm usually used by someone who never sees me. What am I? Answer: A casket.
Photo Of The Week
Fishing Boats at La Gan Beach, Vietnam
Footnotes and Sources
2. The Wall Street Journal, October 20, 2023
3. The Wall Street Journal, October 20, 2023
4. CNBC, October 17, 2023
5. CNBC, October 17, 2023
6. CNN, October 18, 2023
7. The Wall Street Journal, October 19, 2023
8. IRS.gov, January 31, 2023
9. Formstack, July 19, 2023
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Weekly Market Insights: Rising Bonds Cause Market Decline
October 23, 2023