Most stock indices posted substantial gains for the week with the Russell 2000 small cap index up the most and emerging markets flat.
The Federal Reserve met this week and announced it was starting to taper bond purchases with the goal to be done by June of next year. The FED emphasized that the pace of the taper could be accelerated or decelerated depending on inflation and employment data.
The Bank of England surprised markets by maintaining interest rates at 0.1% rather than staring to raise them. The BOE focused on slowing growth over the increased inflation data and believes inflation will be transitory.
October posted a robust jobs number with August and September both revised higher as enhanced unemployment ended and the covid delta variant waned.
Treasury yields fell with the 30-year bond yield closing at 1.892% and the 10-Year note closing at 1.454%. Crude oil fell to $81.53 a barrel and natural gas rose to $5.729 per MMBTUs. The U.S. dollar index rose to 94.14 and gold rose to $1818.80 an ounce.
In the economic numbers:
- Markit Economics released the October purchasing managers indices. Keep in mind that anything over 50 represents expansion and under 50 represents contraction:
- U.S. manufacturing PMI slowed from 60.7 in September to 58.4 in October.
- U.S. services PMI rose from 54.9 in September to 58.7 in October.
- Canada manufacturing PMI rose from 57.0 in September to 57.7 in October.
- China manufacturing PMI rose from 50.0 in September to 50.6 in October.
- China services rose from 53.4 in September to 53.8 in October.
- Japan manufacturing PMI rose from 51.5 in September to 53.2 in October.
- Japan services PMI rose from 47.8 in September to 50.7 in October.
- Eurozone manufacturing PMI fell from 58.6 in September to 58.3 in October.
- Eurozone composite PMI fell from 56.2 in September to 54.2 in October.
- The Commerce Department reported the U.S. trade deficit rose 11.2% in the month of September as imports rose and exports fell.
- The Labor Department reported:
- Average hourly earnings were 4.9% higher than last October.
- The workforce participation rate was unchanged overall but rose slightly for women.
- A seasonally adjusted 269,000 workers filed initial claims for unemployment in the week ending October 30th, down from a revised 283,000 the week before. This was the lowest since March of 2020.
- The 4-week moving average of claims, designed to smooth out volatility, was 284,750.
- Continuing claims fell from 2.2MM to 2.1MM in the week ending October 23rd.
- A broader measure of claims including extended benefits, pandemic assistance and other programs fell from 2.8MM to 2.7MM in the week ended October 16th.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the prior week:
- Field production of crude rose from 11.3MM BPD to 11.5MM BPD.
- Natural gas storage rose 63BN cubic feet and is below the 5-year average at this time of year.
- Baker Hughes reported the number of active oil rigs rose 6 to 450. The number of active natural gas rigs was unchanged at 100.
- Factset reported with 89% of S&P 500 companies reporting Q3 earnings, the blended earnings growth rate was 39.1% from a year ago.
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Loren C. Rex, CFP®, MA Erik A Smith, AIF®
Founder / Emeritus President & C.E.O.
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.