2023 | October 9

The Market

Stocks Snap Negative Streak

The S&P 500 managed to snap a string of four negative weeks in a row, posting a fractional gain, while the Dow fell slightly and the NASDAQ rose nearly 2%. It didn’t come without turbulence, as shifting expectations leading up to Friday’s monthly U.S. employment report buffeted the markets. 

The U.S. labor market’s resilience continued to dampen the near-term prospects of a recession, as the gain of 336,000 jobs in September was the biggest in eight months and roughly double the number that most economists had been expecting. In addition, prior monthly estimates of jobs growth were revised upward and September’s unemployment rate was unchanged at 3.8%.

Friday’s strong jobs report helped to accelerate the recent price sell-off in the bond market, as the 10-year U.S. Treasury’s yield climbed to the highest level since 2007. It closed around 4.79% on Friday, up from 3.30% just six months earlier. On Friday morning, the 30-year Treasury’s yield briefly topped 5.00% before settling below that threshold.

The further rise in bond yields reflected growing market expectations that the U.S. Federal Reserve may extend its timeline for potentially transitioning to rate-cutting mode, after having raised rates sharply since early 2022. One measure of market expectations indicated a growing consensus that the Fed may hold off until July 2024 to begin cutting. 

Expectations are low heading into earnings season, which opens late this week as major banks begin reporting third-quarter results. As of Friday, analysts surveyed by FactSet were expecting companies in the S&P 500 to post an average earnings decrease of 0.3% compared with the same period a year earlier. If there is a decline, it would be the fourth consecutive quarter of shrinking earnings. 

Prospects of lower global demand for petroleum weighed on oil prices, and U.S. crude dropped to around $83 per barrel for a nearly 9% weekly decline, the biggest since March 2023. As recently as September 27, oil traded as high as $94—a year-to-date high.

The price of gold fell on Thursday to its lowest level in seven months, with gold futures trading at around $1,816 per ounce. The price was down from a recent peak of about $1,945 on September 20.  

A Consumer Price Index report scheduled to be released on Thursday will show whether the recently mixed trends on the path of inflation extended into September. The most recent CPI report for August showed that inflation rose 0.6% on a month-to-month basis. Higher energy prices fueled much of the increase; excluding energy and food prices, core inflation rose at a more modest 0.3%.

Source: John Hancock Investment Management

Interest Rate Expectations

Strange But True

The animal world is filled with wonders. For example, National Geographic reports that the world’s lightest mammal is the Bumblebee bat. It weighs in at two grams – about the same as two standard paper clips. See what you know about recent occurrences in the natural world by taking this brief quiz.

1.Flamingos that may have been flying from Cuba to the Yucatan were blown off course by Hurricane Idalia. So far, they’ve been found in 12 U.S. states, according to news reports. What is the northernmost state where they have been found?

a. Minnesota

b. Wisconsin

c. Montana

d. Alaska

2.Scientists believe that the ability to solve problems independently is a sign of intelligence among animals. In a recent study, scientists scattered “puzzle boxes with three differently configured compartments that contained highly aromatic jackfruit” across an area to see whether Asian elephants would be willing and able to open the boxes. How many of the 44 elephants that approached the boxes were able to figure out at least one way to open them?

a. 37

b. 24

c. 11

d. 4

3.Blue is one of the rarest colors in nature. Last year, explorers in Thailand found a new species of creature with iridescent blue patches on its body. What type of creature was it?

a. A sloth

b. A snail-eating snake

c. A tarantula

d. An owl

Answers: 1) b; 2) c; 3) c

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