The Week on Wall Street
Rising bond yields and government shutdown fears left stocks in mostly negative territory for the week.
The Dow Jones Industrial Average lost 1.34%, while the Standard & Poor’s 500 slipped 0.74%. The Nasdaq Composite index was flat (+0.06%) for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 1.95%.1,2,3
Stocks Follow the Bond Market
The bond market drove stock prices for much of last week as investors fretted about rising bond yields. After beginning the week with small gains, stocks resumed their September decline amid weak housing data and a decline in consumer confidence. However, it was the jump in bond yields, which sent the 10-year Treasury yield to near a 15-year high, that may have most undermined investor sentiment.4
After a failed attempt at a rebound mid-week, stocks staged a Thursday rally on a pause in bond yield increases–a rally that extended into Friday morning on an encouraging core personal consumption expenditures (PCE) price index report. (PCE is the Fed’s preferred inflation gauge.) But the rally faded as traders fixated on a potential government shutdown.
Mixed Economic Signals
Amid recent signs of a labor market cooling (a hopeful sign for ending rate hikes), last Thursday’s initial jobless claims report showed only a slight increase of 204,000. That was the second-lowest reading since January and below economists’ expectations of 215,000. Continuing claims declined by 12,000.5
That same morning, the final estimate of second-quarter GDP was released, indicating a 2.1 annualized growth rate–unchanged from the previous estimate. However, beneath the headline number, consumer spending was cut to a 0.8 percent rise from its earlier estimate of 1.7 percent–a worrisome revision since consumer spending is the engine of the U.S. economy.6
What goes in the blank below: Bob is Ken’s son. Therefore, Ken is the ______of Bob’s father.
Last week’s riddle: Hannah went to a local hardware store to buy some small items. One would cost $2, two would run $4, but buying 122 would only cost $6. She purchased 122, yet she was not buying in bulk; she could carry what she bought with one hand. What did she purchase?
Answer: She bought house numbers. As her street address starts with the number 122, she purchased two carved “2s” and one carved “1.”
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