Weekly Market Insights: Slowing Labor Market Cause Bond Yields to Fall

Margie Mitchell

November 06, 2023

Last week, stock prices rose sharply as bond yields fell due to easing inflation and a slowing labor market. The Dow Jones Industrial Average climbed 5.07%, while the Standard & Poor's 500 surged 5.85%. The Nasdaq Composite index soared 6.61% higher for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 3.12%.

Stocks Rise

Stocks started the week on a high note, recovering from the previous week's sell-off. The combination of the Federal Reserve's decision to maintain current rates and Chairman Powell's dovish comments, along with reassuring news from the Treasury on future bond sales, led to a third consecutive day of gains on Wednesday. Slight employment growth and weak manufacturing data also contributed to the market's positive momentum.

The rally continued on Thursday, driven in part by a sharp drop in bond yields resulting from substantial productivity gains and slower wage growth. On Friday, when the monthly employment report was weaker than expected, yields dropped even further and stocks continued to gain throughout the week.

Signs of Labor Cooling

The latest employment data has raised concerns about a slowdown in the labor market, which has been surprising economists for many months. The lower-than-expected growth in new private sector jobs in October, as reported by Automated Data Processing (ADP), showed a gain of 113,000 new jobs compared to the forecast of 130,000, while job openings remained unchanged. Additionally, initial and continuing jobless claims exceeded consensus estimates. The government's monthly employment report for October further confirmed the potentially cooling employment picture, as it revealed a slowdown in hiring with only 150,000 new jobs added compared to September's revised gain of 297,000. The unemployment rate also increased to 3.9%.

This Week: Key Economic Data

Thursday: Jobless Claims.

Friday:Consumer Sentiment.

^{Source: Econoday, November 3, 2023
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Tuesday:D.R. Horton, Inc. (DHI), Gilead Sciences, Inc. (GILD), Air Products and Chemicals, Inc. (APD)

Wednesday:Occidental Petroleum Corporation (OXY), The Walt Disney Company (DIS)

Thursday: Becton, Dickinson and Company, Inc. (BDX).

^{Source: Zacks, November 3, 2023
The companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

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Food For Thought

"I don't trust people who don't love themselves and tell me ‘I love you.'"

– Maya Angelou

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Tax Tip

Is it Time for a Paycheck Checkup?

It is important to check your withholding status regularly, to ensure that your paycheck reflects the accurate taxes you should be paying. It's a good practice to do a paycheck checkup whenever there is a significant event in your life that may change your tax status, such as getting married, having a baby, getting divorced, starting a new job, or receiving a raise or promotion. In addition, you may need to adjust your withholding status for other reasons.

During your paycheck checkup, it's also advisable to review other factors that may affect your tax liability, such as how much you contribute to your health insurance or 401(k). These expenses can impact the amount of tax you owe.

Please note that this information is not intended to replace personalized tax advice. Therefore, we recommend that you consult with a qualified tax professional about your specific tax issues.

Tip adapted from IRS.gov⁶

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Healthy Living Tip

5-Minute Core-Strengthening Workout

If you have limited time but still want to work on your core, you can do this circuit for just 5 minutes. The routine includes the following moves:

- 1-minute high plank: Keep your arms straight and hold your body up with your arms and a tight core while your hands are on the ground.
- 30-second side plank on each side: Keep one hand on the ground with your arm straight and the other hand in the air. You can do this with your feet stacked on each other (most challenging), your feet staggered (a little easier), or your bottom knee on the ground.
- 1-minute boat pose: Keep your arms by your side and your feet in the air. Reach to your feet while posing with your legs bent (easier) or straight out (harder).
- 1-minute crunches: Lift your shoulders and upper back off the ground without pulling your neck.
- 1-minute dead bug: Lay on your back and alternate extending the opposite arm and the opposite leg simultaneously.

Tip adapted from Mind Body Green Movement⁷

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Riddle of The Week

Einstein’s Riddle: A man meets a bear in a wasteland. Both are startled. The man runs north, and the bear runs west. Suddenly, the man aimed his gun south and shot the bear. What color was the bear?

Last week’s riddle: What 3 numbers can you add together and get the same result as when you multiply them? (All 3 numbers are whole and positive, and none are double-digit.) Answer: 1, 2, and 3. 1x2x3 = 6 and 1+2+3 = 6.

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Photo of The Week

A young woman walks through Jantar Mantar astrological park in Jaipur Rajasthan, India.

Footnotes and Sources

^{1. The Wall Street Journal, November 3, 2023.}

^{2. The Wall Street Journal, November 3, 2023.}

^{3. The Wall Street Journal, November 3, 2023.}

^{4. CNBC, November 2, 2023.}

^{5. The Wall Street Journal, November 3, 2023.}

^{6. IRS.gov, May 30, 2023.}

^{7. Mindbodygreen.com, July 19, 2023.}

^{Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.}

^{The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.}

^{The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.}

^{The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.}

^{U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.}

^{International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.}

^{Please consult your financial professional for additional information.}

^{This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.}