Markets “In a Nutshell” for October 9, 2023
Investment Week at a Glance
Stocks finished mixed for the week. The Dow Jones Industrial Average fell 0.30%, the S&P 500 was up 0.50%, and the NASDAQ rose 1.60%. Foreign stocks (MSCI EAFE) were down, falling 2.40%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.79%. (Data source: Wall Street Journal)
Yields Move Higher
The 10-year Treasury yield passed 4.8% last week for the first time since 2007 before ending the week just under 4.8%. Despite the continued rise in rates last week, stocks stayed afloat, and the NASDAQ outperformed the rest of the market. Recently we have been accustomed to seeing the NASDAQ get hit the hardest when rates rise as tech tends to lag the most when rates rise. This shows the market may be adjusting to higher rates and this could be the new normal. With yields moving higher, this could cause rates to be lowered sooner as higher yields typically will slow down the economy. Forecasts for a Fed rate cut continue to be mid-2024 but the chances of a cut coming sooner have been increasing.
Labor Market Remains Strong
The September jobs report was released last week and once again showed the labor market was in a good place. The report showed 336,000 jobs gained last month and unemployment remaining at 3.8%. This unemployment number remained the same due to the number of people who joined the labor force last month. Yields moved higher on news of this report as it shows the economy is still handling the rate hikes and the Fed could be inclined to once again raise rates possibly in hopes of cooling the economy down further. The market is trying to find the balance between positive economic news but not too positive that we see inflation begin to pick up again. One positive number that came from this report regarding the fight against inflation was wage growth was at its slowest pace since June of 2021. This is one of the more important data points as lower wages typically means slower inflation. If wages were rising rapidly, inflation would most likely follow as prices would increase.
How much is the Dow Jones up for the year? (Scroll Down for Answer)
Have a Great Week!
1. 1%. The Dow Jones is now just slightly positive for the year. The Dow does not have a large tech weighting and does not include all of the “Magnificent Seven” companies that have carried the market as a whole this year.