October 2024, US market's Winning Month ?
Equities ended narrowly mixed Thu, 17 Oct 2024 but underlying sentiment darkened and most sectors retreated in response to rising bond yields.
By the time US market closed for the day:
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DJIA: +0.37% (+161.35 to 43,233.05). Its 39th record of 2024, with (1) 21 components of the 30-stock index in positive territory and (2) 9 in negative zone.
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S&P 500: -0.02% (-1.00 to 5,841.47). 9 of 11 broad sectors of the broad-market index were positive. This included $Financial Select Sector SPDR Fund(XLF)$ (1,2%), $Utilities Select Sector SPDR Fund(XLU)$ (2.0%) and $Real Estate Select Sector SPDR Fund(XLRE)$ (1.0%).
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Nasdaq: +0.04% (+6.53 to 18,373.61).
US Market Saviours.
Who saved the US market from stumbling on Thursday?
It’s a mixed bag really: (see below)
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US Retail sales.
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US Weekly jobless claims.
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US Banks.
US Core Retail Sales - Sept 2024
US Retail Sales.
US Retail sales for September 2024, increased solidly as lower gasoline prices left consumers with more money to spend elsewhere, supporting the view that US economy maintained a strong growth pace in Q3 2024.
Monthly sales data :
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Headline sales (MoM): was 0.4% vs forecast of 0.3% vs August’s 0.1%.
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Core retail sales (MoM): was 0.5% vs forecast of 0.1% vs August’s 0.2%.
Core retail sales’ date that exclude autos, was stronger than headline sales, with numbers adjusted for seasonal factors but not inflation that rose 0.2% “monthly” as reported in the consumer price index (CPI) report published on 10 Oct 2024.
Core retail sales (without cars) did better than overall sales. Sales went up 0.2% after adjusting for things like season, but prices also rose 0.2%.
US Weekly Jobless Claims.
Another positive economic report out on Thursday to buoy the market was the US weekly jobless claims.
For week ending 12 Oct 2024, the Labor Department reported that jobless claims have fallen by -19,000 to a seasonally adjusted 241,000, in lined with Wall Street estimates.
This is a “relief” data set, considering it was a spike of +3.21% in jobless claims for week ending 10 Oct 2024.
If we look at the jobless claims report objectively, it has really come off from its peak years of 2020 to 2021. (see above)
US Bank Stocks.
Some of US bigger banks have helped bolstered US market since the start of October 2024. (see above)
They have been trending higher, with the occasional pullback along the way.
Quarterly earnings report.
It helped too that the US banks have all handed in stellar reports on earnings for Q3 2024.
(1) JP Morgan.
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Earnings per share (EPS): $4.37 a share vs. $4.01 a share LSEG estimate
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Revenue: $43.32 billion, vs. $41.63 billion estimate.
(2) Wells Fargo.
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Earnings per share (adjusted) : $1.52 vs. $1.28 expected.
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Revenue: $20.37 billion versus $20.42 billion expected.
(3) Bank of America.
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Earnings per share (EPS): $0.81 vs. $0.77 LSEG estimate.
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Revenue: $25.49 billion vs. $25.3 billion estimate.
(4) Citibank.
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Earnings per share (EPS): $1.51 vs. $1.31 expected.
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Revenue: $20.32 billion vs. $19.84 billion expected.
(5) Morgan Stanley.
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Earnings per share (EPS): $1.88 a share vs $1.58 LSEG estimate.
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Revenue: $15.38 billion vs. $14.41 billion estimate.
(6) Goldman Sachs.
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Earnings per share (EPS): $8.40 per share vs. $6.89 LSEG estimate.
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Revenue: $12.70 billion vs. $11.8 billion estimate.
On Thursday, the Financial Select Sector SPDR ETF (XLF)$, a popular ETF that tracks the performance of the financial sector of the S&P 500 Index, ended the day up by +1.2%. and was one of the top performers.
Based on past 5 days performances:
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$Morgan Stanley(MS)$ is up by +
10.03%.
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$Wells Fargo(WFC)$ is up by +7.57%.
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Bank of America is up by +5.24%.
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JP Morgan Chase is up by +4.2%.
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Goldman Sachs is up by +4.13%.
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Citibank is up by +0.06%.
Friday, 18 October 2024.
Heading into the last trading day of mid-October 2024, elements that continue to influence US market include:
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Quarterly earnings.
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Economic reports.
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Fed’s socialization.
(a) Quarterly earnings reporting.
So far, around 50 of S&P 500 companies have posted their earnings, with 79% of those beating expectations.
This means there are still 450 companies that still need to hand in their report cards.
For Friday, companies reporting will include:
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Procter & Gamble (PG) - Consumer Defensive.
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American Express Company (AXP) - Financial Services.
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Schlumberger N.V. (SLB) - Energy.
(b) Economic reports.
On Friday, investors will be awaiting fresh data on the following 2 economic reports for September 2024.
(1) Housing Starts.
This report measures the change in the annualized number of new residential buildings that began construction during the reported month.
It is a leading indicator of strength in the housing sector.
(2) Building Permits.
Report measures the change in the number of new building permits issued by the government.
Building permits are a key indicator of demand in the housing market.
** For both report — a higher-than-expected reading should be taken as positive/bullish for the USD, while a lower-than-expected reading should be taken as negative/bearish for the USD.
Black out period on the run up to Nov 2024 FOMC meeting
(c) Fed’s Socialization.
Comments are also expected from several Federal Reserve officials, this Friday:
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Atlanta Fed President - Raphael Bostic.
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Minneapolis Fed President - Neel Kashkari.
US central bank officials have up until next Fri, 25 Oct 2024 to complete their social engagements to help them better (i) gauge market sentiments, (ii) communicate policy stances, (iii) build consensus, (iv) provide transparency to build & maintain public trust and last but not least (v) address concern/s on the ground.
Investors will follow the remarks closely for hints about (a) policymakers’ expectations for the economy and (b) monetary policy, especially interest rates.
CME Fedwatch Tool
As of Fri, 18 Oct 2024:
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Probability of a further -0.25% interest cut is 90.7%.
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Probability of no interest cut stands at 9.3%.
Will October 2024 be a winning month, just like October 2023 and October 2022?
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Do you think US companies will continue to report quarterly eqrnings that exceed Wall Street’s expectations ?
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Do you think US economy will continue to grow from strength to strength?
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