John Hancock: Weekly Market Recap Week Ending October 21

Earnings outlook

The subdued expectations for earnings season improved slightly as a second week’s batch of quarterly results came in. As of Friday, third-quarter net income was expected to rise 1.5% compared with the same period a year earlier, based on S&P 500 companies that have already reported combined with projections for those still scheduled to report. In the previous week, analysts had forecast growth of 1.3%.

Labor market resilience

Despite concerns about rising interest rates and recessionary trends, a key labor market indicator continues to show signs of strength. The government reported that American workers submitted 214,000 initial claims for unemployment benefits during the latest weekly period. That figure is down from 226,000 the week before and is close to the historically low level that they’ve averaged year to date.

Yield fluctuations

The yield of the U.S. 10-year Treasury bond eclipsed 4.20% on Friday, a week after breaching the 4.00% level for the first time since October 2008. The yield of the 2-year Treasury was volatile, rising above 4.60% briefly on Thursday before slipping back to 4.51% on Friday—the highest since August 2007.

Price check ahead

A report scheduled to be released on Friday will be closely watched for any signs that U.S. inflation might edge downward anytime soon. The government will update its Personal Consumption Expenditures Price Index, the Fed’s preferred gauge for tracking inflation. The most recent monthly report showed that PCE inflation excluding food and energy prices rose 4.9% in August from a year earlier, up from 4.7% the previous month.

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