The Week on Wall Street
Amid a busy week of corporate earnings reports, stocks slumped on cautious earnings guidance, fears of higher interest rates, and growing anxiety over the increasing amount of Treasury bonds and notes coming to market.
The Dow Jones Industrial Average dropped 1.88%, while the Standard & Poor’s 500 declined 3.29%. But the Nasdaq Composite index gave up 4.48% for the five trading days. The MSCI EAFE index, which tracks developed overseas stock markets, retreated 1.82%.1,2,3
October Slide Continues
Stocks continued their slide last week despite mostly better-than-expected earnings results. While earnings surprises were generally positive, investors were troubled by declines in year-over-year net profit margins and tepid earnings guidance. Particularly hard hit were technology companies, following mixed earnings results.
Economic data released on Thursday showed remarkable economic strength, with above-consensus forecast growth in third-quarter Gross Domestic Product (GDP) and September’s durable goods orders, with only a minor uptick in initial jobless claims. The results fanned worries that the Fed might need to hike rates further or, at least, maintain high rates for longer.
Strong Economic Data
The first read of third-quarter economic growth was a blowout, with GDP increasing at an annualized rate of 4.9%. This pace was well ahead of the prior quarter’s 2.1% expansion and above consensus forecasts. Powering the third quarter’s economic performance was strong consumer spending and inventory build-up.4
Durable goods orders jumped 4.7% in September, confirming the nation’s continued good economic health, easily outpacing the 0.1% rise in August and economists’ forecast of two percent. Meanwhile, initial jobless claims slightly increased, suggesting that the labor market remains healthy.5
Weekly 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.)
Last week’s riddle: How many cubic yards of dirt are in a hole 9′ deep, 8′ long, and 1′ wide?
Answer: None – there are no cubic yards of dirt within a hole.
John Dombroski Jr. may be reached at (480) 991-1055 or [email protected]
www.grandcanyonplanning.com
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