Weekly Recap | October 31, 2022

October 24-28, 2022 Recap

Momentum Extends Another Week

Stocks Advance
U.S. stocks powered higher for a second weekly gain driven higher on earnings relief mostly centered in value-based companies. Growth-oriented companies underperformed relative to value as high-lighted by several earnings disappointments in mega cap technology firms. As of Friday, 262 of S&P 500 companies have reported third quarter results with 68% topping analysts’ projections. The updated outlook now forecasts 3Q revenue and earnings growth of 10.0% and 4.4% respectively.

For the Week…
The S&P 500 advanced 3.97%, while the Dow Jones Industrial Average rose the most, up 5.72%. The tech-heavy Nasdaq Composite gained the least, up 2.25%. The Dow advanced a fourth straight week, while the S&P 500 and Nasdaq capped back-to-back weekly gains. As of Friday, the Dow Industrials was up over 14% in October, poised for its strongest monthly gain since early 1976.

Higher Lending Rates Discourage Buyers
Mortgage applications for a home purchase dropped to a new post-pandemic low. The decline is nearly 50% from the January peak. Mortgage rates rose a tenth straight week, with the average 30-year fixed home loan rate reaching 7.16%, the highest since 2001.

Industrials Advance Most
S&P 500 sector performance was slightly mixed last week with ten of its 11 major groups ending positive over the five-day period. Industrials (+6.74%), Utilities (+6.50%) and Financials (+6.23%) gained the most while Energy (+2.79%) and Consumer Discretionary (+0.71%) rose the least. Communication Services (-2.85%) was the only decliner, retracing over half of its 5.03% prior week gain. Energy remains this year’s biggest gainer, up 67.57% YTD.

Treasury Yields Ease
U.S. Treasury yields for 10-year bonds eased to 4.02% from 4.21% the week prior. Yields on 2-year Treasuries yields held steady at 4.49%. Markets have priced in over 80% odds for another 0.75% Fed rate hike on November 2.

The Latest from @CeteraIM

Labor Costs Rise, Productivity Falls

Mortgage Activity Plummets

Early 3Q Earnings Season Insights

Economic Calendar

Monday, October 31
Chicago-area PMI, Dallas Fed Mfg Index.

Tuesday, November 1
ISM and S&P Global US Mfg PMIs, Construction Spending, Vehicle Sales, JOLTS Job Openings, FOMC Meeting Begins.

Wednesday, November 2
Mortgage Applications, ADP Private Sector Jobs, FOMC Rate & Policy Decisions.

Thursday, November 3
Jobless Claims, Challenger Layoffs, ISM and S&P Services PMIs.

Friday, November 4
Nonfarm Payrolls, Unemployment Rate.

The U.S. economy grew faster than expected in the third quarter. The first of three official estimates showed real GDP growth was +2.6% in Q3, turning positive for the first time this year. Net exports and service spending were strong contributors to economic growth, while residential fixed investment was a detractor.

^{This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.}

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^Glossary

^{The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.}

^{The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.}

^{The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index}

^{The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.}

^{The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Bloomberg US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.}

^{The Bloomberg US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.}

^{The Bloomberg US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.}

^{The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.}

^{The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.}

^{The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.}

^{The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.}

^{The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.}

^{The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.}