Below are the economic and market highlights for the week:
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In a widely expected move, the Federal Reserve lowered interest rates 0.25% to a range between 3.75% and 4.00%. It was the second time the central bank has cut interest rates this year and markets had priced in a third 0.25% rate cut by year-end. However, Fed Chair Jerome Powell threw cold water on the certainty of that expectation on Wednesday, saying in his post-FOMC conference there were “strongly differing views” about how to proceed in December as inflation remains above the Fed’s 2.00% target level while labor market conditions remain weak.
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Consumer confidence weakened in October, reflecting growing uncertainty about the economic outlook amid the on-going federal government shutdown. The Conference Board’s Consumer Confidence Index fell to 94.6 from 95.6 in September. That was its lowest reading in six months. The Present Situation Index, which reflects consumers’ assessment of current business and labor market conditions, gained 1.8 points to 129.3. Meanwhile, the Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions dropped to 71.5, well below the threshold of 80 that often signals a recession ahead.
- Pending home sales were flat in September despite mortgage rates hitting their lowest point in 12 months and inventory hitting a five-year high. Buyer activity was tempered by affordability challenges and economic uncertainty due to the weak labor market and the federal government shutdown. However, affordability could improve if the Fed continues to cut rates, which should send mortgage rates lower.
Earnings Fuel Bullish Spirit, Extending YTD Gains
The S&P 500 cracked 6,900 for the first time ever as AI darling Nvidia hit a mind-boggling $5 trillion market valuation and as investors eagerly awaited tech giants’ Q3 earnings. On Thursday, Google parent Alphabet topped analyst estimates and reported its first quarter ever with more than $100 billion in revenue. Meanwhile, investors were less impressed with Meta and Microsoft and their lavish spending on AI infrastructure amid their race to dominate the AI space. Amazon and Apple reinvigorated sentiment, however, reporting after the bell on Thursday. Both exceeded analyst expectations and guided higher for Q4. Both also posted revenue of more than $100 billion in the quarter with Amazon projecting Q4 to be its first $200 billion+ quarter. Even Fed Chair Jerome Powell gave an assist to the AI trade during his post-FOMC conference comments on Wednesday, characterizing the AI rally as being different from that of the dotcom bubble due to its economic and earnings growth potential. This stands in stark contrast to Alan Greenspan’s cautionary warning over “irrational exuberance” in 1996 during the nascent stages of the dotcom rally. In other Fed matters, Powell managed to disappoint markets by pushing back on expectations for an automatic rate cut in December, noting that the central bank is internally wrestling with how to navigate monetary policy amid elevated inflation, a weak jobs market, and a lack of data due to the government shutdown.
October – which has historically experienced some of the largest one-day losses in stock market history – delivered solid gains this year for investors. The S&P 500 and Dow Jones Industrial Average added 2.30% and 2.50%, respectively. Meanwhile, the tech heavy Nasdaq sprinted to a 4.70% gain. Year-to-date, the S&P 500, Dow, and Nasdaq are up 16.30%, 11.80%, and 22.86%, respectively. Strong earnings and AI momentum helped lead the indices higher, superseding a lack of government economic data amid the now month-long shutdown, persistent inflation, and a weak labor market. As of Thursday, S&P 500 earnings are higher by 12.50% year-over-year. Of the 278 companies that have reported earnings to date, 83.10% have reported above analyst expectations. That compares favorably to the long-term average of 67%. With October trading now in the books, investors have begun looking ahead to what November holds. Markets have thus far been tolerant of the shutdown and gridlock in Washington but will likely start to gird for a funding deal with earnings season drawing to a close. The motivation for both parties to find a deal could come from the expiration of funding for the Supplemental Nutrition Assistance Program (SNAP), open enrollment period starting for the Affordable Care Act, and federal workers continuing to suffer absent paychecks. According to the nonpartisan Congressional Budget Office, the current closure could cost the economy between $7 billion and $14 billion. Although the economy historically bounces back after the government re-opens, this shutdown is coinciding with the busy holiday shopping season which could crimp consumer spending and risks investors re-thinking the current market rally amid lofty valuations.
The Week Ahead
Key reports include ISM Manufacturing, ISM Services, and nonfarm payrolls.
Oh, The Horror!
This Halloween, one of the most enduring traditions continues—watching a scary movie to set the spooky mood. The horror film genre has quietly (or not-so-quietly) become a monstrously successful corner of cinema. It is a surprisingly diverse category of movies that encompasses a range of themes and subgenres ranging from psychological and slasher to dark fantasy and supernatural. There is even a comedy-horror subgenre. Overall, the goal of horror films is simple — to scare, disturb, thrill, and even repulse viewers enough to keep them on the edge of their seats until the end. It might be shocking to hear that the global horror market is valued at a whopping $9.3 billion.
The highest grossing horror film of all time is the movie, “It,” an adaptation of Stephen King’s 1986 novel about a shape-shifting, supernatural clown that emerges every 27 years to feed on the children in the town of Derry, Maine. Released in 2017, It clawed in more than $700 million. While viewers have a huge appetite for horror movies, filmmakers are happy to oblige given that horror films are cheaper to make. The average budget for a Hollywood horror film is around $5 million, but some reach blockbuster status with budgets under $1 million. A blockbuster typically refers to a film that achieves massive commercial success, often grossing over $100 million domestically and $300 million globally, usually characterized by high production budgets, extensive marketing, and wide release. The lowest-budget horror film to gain blockbuster status in the U.S. was “The Blair Witch Project” which was made for $60,000 and earned nearly $250 million worldwide. The “Paranormal Activity” series grossed over $890 million worldwide across its six films. World War Z, featuring Brad Pitt, had one of the highest production budgets for a horror film of $190 million and earned more than $500 million worldwide.
With Halloween upon us, people are tuning in to scary movies. New data from Nielsen, an organization that collects viewing data in the U.S., reveals the most-watched horror films for the first week of October. Data for the rest of the month is not yet available.
Neilsen’s top 10 list includes the following:
- M3GAN 2.0
- Scream (1996)
- Bring Her Back
- 28 Years Later
- Whatever Happened To Baby Jane?
- Slender Man
- Tremors
- Sinners
- Halloween (2018)
- The Intruder
There’s no shortage of “what to watch” lists out there for Halloween. After scouring dozens of them, below is a round up of titles that stood out as fan favorites, complete with brief synopses to help you pick your next fright fest. Viewers beware: we do not and cannot vouch for any of these so watch at your own risk if you dare.
The Substance: Starring Demi Moore, this movie centers on a mysterious black-market drug called the substance that promises to be a fountain of youth but comes with rules and dangerous side effects. This film is considered part of the “body horror” subgenre.
Talk to Me: A group of friends discover how to conjure spirits using an embalmed hand and accidentally unleash terrifying supernatural forces.
Longlegs: Released last year, this movie depicts an FBI agent tracking a serial killer. The agent finds herself personally connected to the case as she unravels clues.
Good Boy: A story about a dog who protects his owner from the supernatural forces that lurk in their new home. It’s considered a good watch for anyone curious how their dog might react to a ghostly presence.
Sinners: Set in Mississippi in 1932, the film features twin brothers who leave a life of crime after making away with a ton of money. Then come the vampires.
Late Night with the Devil: This movie is about an unstable 1970s talk show host who invites a demonically possessed girl on his late night show. The demon’s possession turns gruesome.
Pearl: Part of a trilogy of slasher films, this movie features Pearl as a lonely and desperate farm girl in 1918 who cares for her ailing father and strict, disapproving mother while her husband is a soldier fighting in World War I. Things take a tragic turn when Pearl doesn’t get what she wants.
Nope: This movie is set on a horse ranch and tells the story of good versus evil as characters battle a giant monster that eats people.
X: Starring Jenna Ortega, the film has some slasher elements and is also described by critics as an “effective atmospheric thriller” that has helped establish Ortega as a proper, modern scream queen.
Coyotes: Features a couple who tries to protect their family in their Hollywood Hills home from a deadly coyote attack. The film combines goofy comedy with gory kills.
Bone Lake: A popular horror trope about a vacation gone wrong for a couple whose romantic getaway takes a dark turn. Never trust people you meet on vacation.
With Halloween upon us, horror films once again take center stage proving that few traditions capture the spirit of the season quite like a good scare. If you don’t have a taste for blood and gore, there’s always Hocus Pocus, Casper the Friendly Ghost, and Practical Magic to get your Halloween film fix.