Market Minute
Weekly analysis from the FS Investments Research team
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October 14, 2024
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Equities
U.S. stocks ticked higher despite the 10-year Treasury yield rising back above 4%, with the S&P 500 closing at a new record high. Nvidia surged 7.9% as the company announced its new Blackwell chip is sold out for the next year, and rival AMD’s product release disappointed somewhat. Banks gained Friday as JPMorgan reported strong results across all major businesses, most important of which was resilient NII. We’ll have a better understanding of banking sector health after the bulk of banks report this week. Outside the U.S., stocks in China retraced some of their incredible gains, declining -6.9% last week. Meanwhile, higher U.S. rates was a welcome development for Japanese stocks as the Yen weakened.
Fixed income
Yields crept higher across the curve with the 10-year testing as high as 4.11% before finishing at 4.10%, almost 40bps higher than before the September 18 Fed rate cut. Markets are still expecting 50 bps of rate cuts across the remaining two meetings in 2024, but expectations for next year have moved significantly, with markets now looking for about 6 rate cuts vs 10 rate cuts a month ago.
Commodities
Crude oil prices held steady around $75/bbl during a relatively uneventful week in the Middle East. Industrial metals, which had been a top beneficiary of Chinese stimulus announcements, reversed some gains as traders remain skeptical whether the measures will boost real economic activity. Gold has been remarkably resilient amid a sharp rise in rates, trading roughly flat last week.
Economic overview
Consumer prices rose unexpectedly in September for the second month in a row. The headline 0.2% m/m gain pulled inflation down to 2.4% y/y from 2.5% in August. Excluding food and energy, the 0.3% m/m gain was enough to cause core inflation to notch up to 3.3% y/y. Rents were not the key driver, for once. Instead, higher medical costs, new/used auto prices, airfare and apparel all colluded to keep inflation stubbornly high. Initial jobless claims jumped to 258,000 due to disruptions from Hurricane Helene. We would expect the natural disasters to impact jobs and other economic data throughout October. The University of Michigan consumer sentiment survey slid to 68.9 in October.
Source: Bloomberg Finance, as of October 10, 2024.