CWS Market Review – October 29, 2024

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Job Openings Plunge by 400,000

We’re now in the heart of earnings season, and that’s dominating the news on Wall Street. We’re about one-third of the way through earnings season, and this will be an especially busy week. Companies that make up 42% of the S&P 500’s market value are due to report this week.

Many tech stocks are faring well. In fact, the Nasdaq rallied to a new high today. Alphabet, Google’s parent, reported very good results after the closing bell. Several other tech giants are due to report soon.

It’s hard to draw an overall theme for this earnings season just yet. Some stocks are doing quite well. Royal Caribbean raised its guidance for the fourth time this year, but Ford said that earnings will be at the low end of expectations.

It’s still early, but the beat rate for this earnings season is low. So far, 78% of companies that have reported earnings have beaten expectations. If that trend holds up, this will be the lowest beat rate since Q4 of 2022. That includes the fact that estimates were lowered—sometimes by a lot—as earnings season approached.

The S&P 500 is poised for its sixth positive month in a row, but the market hasn’t moved much in either direction for the past two weeks. That’s usually a bearish sign, but that can change on a dime.

Americans appear to be in an optimistic mood, at least according to the Conference Board. Earlier today, the group said that’s its reading for consumer confidence jumped 11% in October to 138. That’s the largest monthly increase in over three years. The Conference Board also has an “expectations” index, and that rose 8% to 89.1.

The bad news is that the number of job openings for September plunged to 7.44 million. That’s a drop of more than 400,000, and the prior month was also revised lower. Job openings are now at the lowest level since January 2021. The ratio of vacancies to available workers is down to 1.1. Not too long ago, the ratio was more than 2.0.

Layoffs are now at their highest since early 2023. We’re also seeing fewer quits. That’s usually a sign that the labor market is getting weaker. If that’s true, it’s very much different from the data we got in the last jobs report.

We’ll soon learn more. The October jobs report is due out this Friday. Wall Street is looking for a gain of 110,000 new jobs. That’s a low bar, and if that comes in weak, the entire view of the economy could change.

Unfortunately, it’s not going to be easy to divine a trend from these numbers. The problem is that the job numbers could be skewed due to the Boeing strike and the recent hurricanes. In other words, things could be worse than the official numbers say. Also, the job openings data tends to be very volatile.

To add more to the mix, the Federal Reserve meets next week, November 6 and 7. That’s after the election, but it may not be before we know who won. Despite all the hoopla in recent weeks, the expectation on Wall Street is that the Fed will again lower interest rates, this time by 0.25%. The futures market thinks the rate cut has a probability of 99%. I don’t see the Fed altering from its path anytime soon.

The real action lately hasn’t been in the stock market but in the bond market. Treasuries are supposed to be safe and sound but they’re looking at their worst month in two years. That’s probably because traders have realized the economy is better than they thought. Again, it’s not so much that the economy is soaring ahead, but it’s hanging in better than expected.

The yield on the 10-year Treasury rose to 4.28% today. That’s up 55 basis points since October 1. So the Fed lowers rates and the long-terms start to rise? That wasn’t supposed to happen, but Wall Street doesn’t always like to do what it’s told. It’s like a four-year old in that regard, and many others.

Much of the outlook for the market depends on how well the economy fares. Tomorrow morning we’ll get our first look at how the economy did during Q3. Wall Street is optimistic. The consensus is for growth 3.1%.

S&P 500 Calendar Effects

I’ve been working on a project that I thought I’d share with you. I’ve been knee-deep in market data for the last few days.

I took all the data for the S&P 500 going back to 1957. This is how the average month has performed for the index:

I used 1957 because that’s when the index was expanded from 90 to 500 stocks. As you can see, the stock market does much better near the start and end of each month (I used January as a stand-in). From the 6th to the 25th of each month has only been a little positive. The rest of the time accounts for the most growth.

Obviously, I don’t favor a strategy of going in and out of the market that quickly. I’m a confirmed buy-and-hold guy, but I find market patterns like this fascinating.

Here’s a look at how the S&P 500 has performed on each day and date of the month:

I’ve highlighted the best days in blue and the worst days in red. Again, I find this interesting, and it took me a long time to compile. Interestingly, Friday the 13th hasn’t been that bad for investors. Sorry, Jason.

By the way, today is the 95th anniversary of Black Tuesday, also a Tuesday the 29th.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on October 29th, 2024 at 6:31 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.