Weekly Market Commentary 10/23/23
At the Economic Club of New York, Federal Reserve Chairman Jerome Powell said, “Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal. We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters.” Powell continued, “Still, the record suggests that a sustainable return to our 2 percent inflation goal is likely to require a period of below-trend growth and some further softening in labor market conditions.” Atlanta Federal Reserve President Raphael Bostic stated on Friday that he does not expect a rate cut to happen until “late 2024.” Currently, the markets expect either two or three quarter-point reductions by the end of next year.
Costco (COST) CEO Craig Jelinek will step down from his role, effective January 1, with COO Ron Vachris taking over. The company said the decision was a “culmination of the long-standing succession plan.” Vachris has been with the company for more than 40 years, beginning his career as a forklift driver.
Existing home sales for September beat expectations (3.89 million) but decreased to 3.96 million from 4.04 million, which is the lowest reading since October 2010 (3.83 million) and the fourth straight monthly decline. Furthermore, mortgage rates increased for the sixth straight week and reached 8%, its highest level since 2000, resulting in home loan demand falling to its lowest point since 1995.
According to FactSet, as of October 20, 17% of S&P 500 companies have reported earnings with 73% having a positive EPS surprise and 66% having a positive revenue surprise. The blended earnings decline for the S&P 500 is -0.4%, which would be the fourth straight quarter of year-over-year declines. The blended revenue for the index is 1.8%, which would be the 11th straight quarter of growth.
The following companies reported earnings last week: JNJ, LRCX, NFLX, PG, TSLA, USB, BX, GPC.
What to look for this week!
The following companies report earnings this week: DHR, DOV, GOOG, ITW, KMB, MSFT, NEE, NUE, RTX, TXN, V, VZ, WM, ADP, GD, MCO, META, NOW, TMO, AMZN, CMG, MA, MRK, UPS, ABBV, PSX, XOM.
On Wednesday, new home sales for September are expected to increase to 680,000 from 675,000, which was the lowest reading in five months.
On Thursday, the GDP growth rate (first estimate) for Q3 2023 is expected to increase to 4.2% from 2.1%, which was the third straight quarterly decline.
- The Rockline Team
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Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
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The S&P 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.