Economy
The September inflation report was released this week coming in at 2.4%, the lowest point in three and a half years. Contributing to the decline was a drop in energy prices last month. However, prices for food, medical services, and shelter rose in September, keeping inflation elevated above the Fed's target of 2%. Separate from the inflation data, weekly claims for unemployment insurance rose on Friday to the highest level in over a year. Some of the blame can likely be placed on areas impacted by the recent storms in the Gulf. After digesting the data around inflation and the jobs market, the market is still pricing in about a 90% chance of a 0.25% rate cut when the Fed meets on November 7, followed by another 0.25% cut in December.
Markets
The S&P 500 closed higher this week, rising by 1.1% and closing above 5,800 for the first time Friday. Earnings season got kicked off Friday but really gets underway this coming week. Over the next three weeks, nearly 350 companies in the S&P 500 will report on their performance for the last quarter. October is historically the most volatile month for stocks, and in a year with a major election and so much at stake with corporate earnings, you can see why it's sometimes been a choppy ride for investors. However, corporate earnings are expected to continue to rise for the third quarter and through 2025, and we have an accommodative Fed at the moment.
But even if we do experience some turbulence, this bull market may still have some room to run. Ryan Detrick from Carson had some insights this week on historical bull markets. We're two years removed from the 2022 bear market lows, and while we've seen the market rise more than 60% from those levels, by using past bull markets as a measuring stick we may still be in early innings. (It's a bit painful to use that saying with the Royals falling to the Yankees this week.)
What We're Reading
- The Mystery of the Dead Billionaire - Sherwood
- Do US Ports Need More Automation? - Construction Physics
Have a great weekend.
Dogwood Wealth Management