Stocks and Bonds Mixed on Interest Rate Cut Debate
Good morning,
The Dow (+0.3%), NASDAQ (-0.5%), and S&P 500 (+0.1%) finished mixed for the week. Similarly, taxable bonds fell 0.2% while tax-free municipal bonds gained 0.1%. The 10-year Treasury yield rose 0.06% to finish the week at 4.15%.
The government shutdown ended last week but seemingly had little direct impact on the markets. The main driver last week was concern among investors that the Fed may not cut interest rates at its December meeting, as that went from being a foregone conclusion to now being a toss-up. That adversely impacted markets, especially high PE stocks like those involved in AI, and as evidenced by the NASDAQ slipping. Some pundits are concerned that the AI stocks are overpriced, while others believe that they were poised for profit taking.
This week brings very important earnings reports, as well as the September jobs report that was delayed due to the government shutdown. While the jobs report is backward-looking by almost 2 months and the earnings reports represent profitability in the 3rd quarter, this week’s earnings reports will take on additional visibility. The largest company by market cap, Nvidia, will report is earnings after the bell on Wednesday and will likely have an impact on technology and AI-related stocks. Plus, retail bellwethers like Walmart, Target, Home Depot, and Lowe’s will also report their earnings this week and will give some guidance related to the health of the consumer, which makes up 68% of the US economy.
Have a great day and terrific week!
Source: Yahoo Finance
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