Market Update – October 11, 2024

Major Index Performances (as of Thursday Close): 

• S&P 500: The benchmark index rose about 0.5%. 

• Dow Jones Industrial Average: The Dow gained 0.24% 

• Nasdaq Composite: The index rose 0.79%. 

For the second week in a row, Mother nature has unleashed her fury across the East Coast. Hurricane Milton made landfall yesterday leaving a path of destruction across Florida. Milton came in as a category 3 hurricane but was later downgraded to a category 1. Florida Governor Ron DeSantis said during a news conference on Thursday that officials have not determined the extent of the damage yet. It may be several months, if not years to determine the full economic impact of Helene and Milton.  

In other economic news, inflation came in hotter than expected in September. The consumer price index, the most widely used measure of inflation, increased 2.4% from September 2023 to September 2024. This index was expected to see a year-over-year increase of 2.3%. A Thursday news release from the Bureau of Labor Statistics reported the year-over-year increase in the CPI was the smallest rise since February 2021. 

The surprisingly hot inflation reading is a sign the economy is running strong, but the data complicates the Federal Reserve’s next rate decision. Higher inflation would make further cuts less likely, however, weekly jobless-claim figures came in higher than expected, so the probability of a November rate cut is 83%.  

Third quarter earnings reporting will be in full swing next week. Analysts have lowered growth rates from 8% to 4%. The energy sector is expected to see a 20% decline, the steepest of any sector.  

Core CPI, which excludes volatile food and energy costs, increased 3.3% over the year in September after increasing 3.2% over the year in both July and August. It was expected that September’s rate would be 3.2%. The food index rose 2.3% for the 12 months ending in September. That’s greater than the 2.1% increase in August. 

Bottom line, prices are still rising, and the average American is continuing to struggle. The consumer is 70% of Gross Domestic Products, and if their dollar keeps getting stretched, it will eventually snap.  

The market still has momentum, and until we see a significant uptick in unemployment, that momentum can continue. We constantly monitor our strategies, looking for opportunities and weakness in the market. We continue to hold cash, while seeking opportunities in longer duration fixed income. The 10-year treasuries are back above 4%, offering some long-term stability. 

Have a wonderful weekend, 

Your Portfolio Management Team