Investment Week at a Glance

Stocks finished higher for the week. The Dow Jones Industrial Average rose 0.8%, the S&P 500 was up 0.7%, and the NASDAQ rose 2.2%. Foreign stocks (MSCI EAFE) were down for the week falling 0.3%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.09%.  (Data source: Wall Street Journal)

Fed Cuts Rates by 0.25%

The Federal Reserve cut interest rates as expected by 0.25% and markets had little reaction to the news. Fed Chair Powell did indicate a December cut was not guaranteed, and yields rose as the odds of a December cut fell to 70%. There was also some disagreement among the Fed Board, with one member voting for a 0.50% cut and another for no cut at all. Despite the uncertainty in rate cuts, the market is pricing in 3 more cuts by the end of 2026. The one thing we can expect is lower rates going forward as the Fed seems focused more on the employment mandate rather than inflation. 

U.S. China Trade Tensions Ease

President Trump and Xi Jinping met last week, and the meeting seemed to go rather well as Trump cut tariffs down by 10% on China. China committed to pausing restrictions on raw-earth mineral exports to the U.S. and promised to restart soybean purchases. Both countries also paused port fees and trade investigations on each other. It seems the trade worries have gone away in the short term, but they will continue to play a role going forward with this administration, it seems.

Amazon Beats Earnings Expectations, Stock Rises 10%

Amazon reported earnings last week and blew through expectations as the stock rose 10%. The company was in headlines earlier this week for laying off 14,000 corporate employees, which caught headlines as some tried to point to this being a sign of weakness in the economy. One thing to remember is that Amazon has over 1.58 million employees, so this layoff represents less than 1% of its workforce. Amazon also said it would raise capital expenditure to $125 billion in 2025 as it continues to invest in its future. (CNBC)

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Quiz

Of the S&P 500 companies that have reported Q3 earnings, what % have beaten expectations? (Scroll Down for Answer)

1.    85%
2.    79%
3.    71%
4.    63%

Answer:

1. 85%. Q3 earnings have been very strong and if this % holds as the remaining companies report, it will be the strongest quarter since Q2 of 2021 where 87% of companies beat earnings expectations.

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