John Hancock: Weekly Market Recap Week Ended October 11th

Trade progress

About 10 minutes before U.S. markets closed on Friday, U.S. and Chinese negotiators announced a partial trade deal between the world’s two largest economies. The tentative agreement includes a U.S. retreat from a threatened tariff increase, a Chinese commitment to buy U.S. farm products, and language addressing differences over intellectual property and financial services.

Earnings slump

With major banks set to open quarterly earnings season this week, earnings across the broad market are expected to decline for the third quarter in a row—something that hasn’t happened in nearly four years. Profits for companies in the S&P 500 are expected to decline more than 4% compared with the same quarter a year ago, according to FactSet.

Fed backstop

The U.S. Federal Reserve announced plans to buy Treasury debt to increase the size of its balance sheet and prevent a recurrence of recent stresses in the repo market, which provides short-term funding for corporate borrowers. The Fed planned to begin initial purchases of $60 billion in Treasury bills starting Tuesday. 

Weak inflation

The latest reading on U.S. inflation showed that the Consumer Price Index was unchanged in September relative to the prior month, the weakest inflation reading in eight months. The latest data could alleviate concerns that further interest-rate cuts by the U.S. Federal Reserve could unleash a spike in inflation.

Source: https://wmr.jhinvestments.com/