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Market Recap – November 6, 2023

Keel Point

November 6, 2023

Last week financial markets were boosted by the Fed’s decision not to raise interest rates, the October employment report being weaker than expected, and longer-term interest rates declining.

  • The Fed didn’t raise rates last Wednesday, and the post meeting press conference also struck a more “dovish” tone which contributed to the movement toward lower longer-term Treasury rates and a boost in stock prices.
  • The October employment report showed a cooling jobs market with employers adding only 150,000 jobs, which was down from 297,000 (revised) in September.
  • The unemployment rate increased to 3.9%, the highest in 21 months, and a broader measure of unemployment that considers part-time workers seeking full-time jobs also increased.
  • Average hourly earnings rose 0.2% in October and were up 4.1% over the last 12 months. Most helpful, however, is that wages have risen at a 3.2% annual rate over the past three months, which is consistent with the Fed achieving its 2% inflation target.
  • The good news is that while the labor market remains fundamentally strong, it is not contributing to rising inflation and not creating angst in financial markets that the Fed will need to raise interest rates further.
  • The 10-year treasury yield ended the week at 4.57% which is significantly lower than the prior week’s close at 4.85% and from when it was touching 5% last month.
  • Last week both the S&P 500 and the DJIA had their “best days” since April and June, respectively. In addition, the S&P 500 closed the week up 5.29% and YTD is up 13.97%.

There are a couple additional macro-economic developments that likely will be helpful to financial markets over the next three months.

  • Slowing but still growing manufacturing and services sectors and the positive productivity growth reported last Tuesday will drive down employment costs further.
  • Recent signs of China addressing its ideological, demographic and policy challenges may become helpful to China spurring more growth in the global economy.

 

Disclosure: Securities offered through Keel Point Capital, LLC, Member FINRA and SPIC. Brokerage and Investment Advisory Services are offered under the Keel Point brand. Investment Advisory Services offered by Keel Point, LLC, an affiliate of Keel Point Capital, LLC. While reasonable efforts have been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Keel Point does not give tax, accounting, regulatory, or legal advice to its clients.

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