John Hancock: Weekly Market Recap Week Ended October 24

Fed cut ahead?

Bond market trading continued to support expectations of an interest rate cut at the upcoming U.S. Federal Reserve meeting scheduled to end on Wednesday. As of Friday afternoon, prices in rate futures markets implied a nearly 97% probability that the Fed would cut by a quarter point, according to CME FedWatch. It would be this year’s second such move following the Fed’s cut in mid-September.

Top-heavy earnings

Approaching the midpoint of earnings season, a handful of U.S. mega-cap technology stocks are expected to continue generating a disproportionate share of overall earnings growth. Analysts expected that the group of stocks known as the Magnificent Seven generated average third-quarter growth of 14.9%, according to FactSet. In contrast, the other 493 companies in the S&P 500 were projected to produce growth of 6.7%.

Record territory

Each of the major U.S. indexes climbed around 2% for the week as stocks extended the previous week’s positive momentum. The S&P 500, the NASDAQ, and the Dow eclipsed record highs set early this month.

Inflation uptick

Friday’s Consumer Price Index report showed inflation rising at a slightly slower pace than most economists had expected, with an annual rate of 3.0% in September compared with a consensus forecast of 3.1%. The government shutdown continued to delay most economic releases; the inflation report was issued to meet a statutory deadline involving benefit payments tied to inflation.

SOURCE: https://www.jhinvestments.com/weekly-market-recap#market-moving-news