John Hancock: Weekly Market Recap Week Ended October 16

Earnings kickoff

Overall earnings expectations were modestly scaled back after mixed results came in from the major U.S. banks that opened earnings season. As of Friday, analysts projected that third-quarter earnings for companies in the S&P 500 rose 29.0%, down from a forecast of 29.4% a week earlier, according to FactSet. Such an outcome would mark the third consecutive quarter of earnings growth exceeding 25%.

Retail resilience

U.S. retailers reported a bigger-than-expected gain, with sales up 0.8% in September versus economists’ consensus of 0.3%. However, excluding gasoline sales, retail sales rose just 0.2%—reflecting the recent rise in fuel prices.

Sticky inflation

Two reports reflected persistently elevated inflation at the consumer and wholesale levels, with costs rising beyond energy prices. Wednesday’s Consumer Price Index report showed a 3.7% annual rate in September, up from 3.4% the previous month. A separate Thursday report on producer prices showed wholesale inflation rose in September at a 6.3% annual rate, the highest since 2022.

Yield curve flattens

Yields of longer-dated U.S. Treasury debt fell for the second week in a row, with the 10-year Treasury ending the week at 5.08%, down from 5.24% the previous week. The 30-year yield was also down sharply at 5.43% from 5.60%. In contrast, shorter duration yields fell modestly, with the 2-year Treasury at 4.72% versus 4.79% the prior week.

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