Below are the economic and market highlights for the week:
- Housing continues to disappoint: High prices and financing costs pushed home sales to a 14-year low. Existing home sales fell 1.00% to an annual rate of 3.84 million in September. Despite the drop in volume, the median price of a home continued to move higher, rising 3% yoy to $404,500. With September’s rise, home prices are now a mind-boggling 50% higher than the same period five years ago. All cash buyers dominated the market, accounting for 30% of September sales. Prior to Covid, cash buyers comprised only about 20% of sales. The report did have one silver lining, the number of homes available for sale rose 1.50% month-to-month to 1.39 million units. That is equivalent to a 4.3 months’ supply which is trending closer to the six to seven months of inventory considered to be a healthy balance between supply and demand. Until we see improved affordability through some combination of flattening prices or lower financing costs, it looks like it will be a tough market for would-be buyers.
- Services strong while manufacturing contracts: U.S. factory orders slipped in September. Orders at U.S. factories fell 0.80% during the month primarily due to fewer Boeing aircraft bookings. The aircraft maker is locked in a bruising strike, now entering its sixth week. On Wednesday, union members rejected Boeing’s latest contract proposal which means 33,000 workers remain on the picket line and will continue to hinder production. However, excluding volatile aircraft and autos, it was a much healthier picture for manufacturers as new orders rose a healthy 0.40%. In more good news for manufacturers, core orders – which are viewed by investors as a signal of future business prospects – rose 0.50%. That marked their second consecutive monthly increase. Meanwhile, the US Services PMI reading in October came in at 55.3, modestly higher than expectations. With services solidly in expansion and core orders improving for manufacturing, the economy appears to be on a solid footing.
Markets Reset Rate Expectations
The Dow Jones Industrial Average and S&P 500 failed to post gains this week as momentum swung away from industrials and back to tech. The shift in sentiment allowed the tech heavy Nasdaq Composite Index to deliver a 0.50% gain on the week’s session, hitting a record high on Friday on the road to its seventh straight weekly gain. Strong margin results from Tesla on Wednesday, along with Apple, Alphabet, Amazon, and Microsoft being on tap to report next week resulted in renewed investor enthusiasm for the sector. It was a quiet week for news, which meant that earnings were about the only thing to focus on. Thus far, earnings on a company-by-company basis have generally beat estimates, but in aggregate, year-over-year growth has only been about 4.02%, which is slightly lower than the 4.10% expected coming into the earnings season. That in conjunction with rising U.S. Treasury yields and stronger than expected economic data has forced bulls to reassess their rate expectations and dampened enthusiasm for economically and interest rate sensitive sectors this week. The strong services PMI reading and improvement in the core goods component within the manufacturing survey reminded investors that the Fed still remains very much data dependent with respect to future rate cuts – cuts which may no longer be warranted if growth continues to accelerate.
It’s difficult to put a narrative on a slow week. Markets were probably a little disappointed with this week’s earnings results, but then again, we’re coming off six straight weeks of gains. There were times, particularly early in the week, where it felt like investors may be sobering up to high valuations and the fact that they are probably not getting two more cuts by year end, but by the latter part of the week, AI hype was back which propelled tech higher. Markets just seem to waffle ahead of what will be a busy news cycle next week where we’ll get our first read on Q3 GDP. Analysts are expecting the economy to have expanded at an annual rate of 3.00%. The October jobs report will be closely watched as well with economists anticipating that as many as 254K could be added to the payrolls. Investors will want to see solid results – but not so strong that it results in a change in the Fed’s accommodative posture.
The Week Ahead
Markets look to close October trading on a high note. On the economic front, a stronger than expected October jobs report could raise concerns the Fed may pause rate cuts and trigger bearish sentiment. Investors will also get their first read on Q3 2024 GDP.
Spooktacular Style: This Year’s Top Trending Halloween Costumes
There are just six days until Halloween, and Google Trends has released its annual “FrightGeist” list of the year’s top trending costumes across the country. The rankings are based on a comparison of Google searches in the U.S. in September 2023 and September 2024, reflecting costumes that “experienced the biggest increase in search interest year over year,” rather than “the top-searched costume ideas overall.”
Below are the top trending costumes according to Google Trends:
#1. “Shrunken Head Bob” from the Beetlejuice movie franchise. Originally released in 1988, the movie’s sequel, Beetlejuice Beetlejuice, premiered last month.
#2. Raygun from the 2024 Summer Olympics in Paris. Raygun is the Australian Olympic breakdancer who scored zero points in all three of her round robin battles and was eliminated. She had very unconventional moves (i.e. the kangaroo hop) and wore a green and yellow tracksuit.
#3. Catnap, a royal purple cat-like monster character from Poppy Playtime, a survival video game in the horror genre.
#4. Delores from Beetlejuice Beetlejuice. The character appears with staples across her face in a black wedding dress and is the ex-wife of Beetlejuice and main antagonist in the film. “Fake staples” became a breakout search the day the movie was released.
#5. Pomni, a character from an independent animated web series called “Amazing Digital Circus” — a psychological dark comedy about humans trapped in a virtual world — that recently became available for streaming on Netflix.
#6. Envy from the movie Inside Out from Pixar Studios. The first Inside Out movie was released in 2015, and Inside Out 2 was released this past June, quickly becoming the highest-grossing animated movie of all time, raking in $1.46 billion at the global box office and dethroning 2019’s Frozen 2.
#7. Red from the Descendants, a Disney franchise that’s now in its fourth installment. The films follow the children of Disney characters, and Red is the rebellious daughter of the Queen of Hearts.
#8. Dr. Doom, a Marvel Comics supervillain.
#9. Sabrina Carpenter, a pop star who has opened for Taylor Swift’s Eras Tour. Searches for her custom heart cut-out corset dress have surged.
#10. Lady Deadpool from the movie Deadpool & Wolverine.
#11. Chipotle Burrito. Chipotle released its first-ever line of Halloween costumes this year, and the burrito option is the winner. The other costumes include a napkin, fork, water cup, and to-go bag. Additionally, the chain is again offering its “Boorito” promotion where costume-wearing customers can get scarily great deals.
#12. Anger from “Inside Out.” Anger is second to Envy when it comes to emotion costumes, but ahead of Disgust.
#13. Disgust from “Inside Out.”
#14. Wolverine.
#15. Anxiety from Inside Out.
You can view the full list of the top 25 trending costumes here, including the top kid costumes, dog costumes, duo costumes, and more. Plus, Google Trends offers an interactive map that shows the most popular costumes by geographic area that can be viewed here.
All of us at Probity Advisors wish you a happy and safe Halloween.