Weekly Investment Perspective

U.S. equity markets continued to press higher last week amid robust economic data including a strong retail sales report and generally well-received third quarter corporate earnings reports. The S&P 500 logged a sixth consecutive week of gains and notched its 46th all-time high of 2024 as it gained 0.87% for the week, while the Dow Jones Industrial Average (DJIA) gained 0.98%. However, S&P mid and small-cap companies outdid their larger counterparts for the week and were up 1.43% and 1.65%, respectively, with support from growing investor expectations for a soft landing.

U.S. consumer resilience positively surprised yet again last week as the Commerce Department reported better than expected U.S. retail sales for September. Gasoline prices dropped about 12 cents per gallon last month giving consumers a little more money to spend on other purchases. WTI crude oil is now down over 18% from its mid-summer highs as it fell below $70 per barrel last week. Additionally, many consumers are seeing income growth supporting better household balance sheets. Even though the labor market has slowed, businesses are wary of laying off employees for fear of not having them when business picks up again. Clothing store sales were up 1.5% after a drop of 0.8% the previous month. Miscellaneous store retailers saw a large increase of 4.0%, along with online purchases going up 0.4%. Core retail sales, those that exclude automobiles, gasoline, building materials and food services, went up 0.7%, building on the increase of 0.3% in August.

Hurricane’s Helene and Milton are affecting the jobless claims numbers in both initial and continuing claims. Initial claims for the week ending 10/12/24 came in at 241.0K, lower than expected, but with so much of the southeast reeling from the devastation of Helene (and then Milton) we may see a resurgence in the next couple reporting periods. Continuing claims came in slightly higher than expected at 1,867K. The devastation of the two hurricanes in quick succession on the southeast and the stories of those impacted are a stark reminder that the costs are well beyond financial.

Housing starts for September were down 0.51% from the previous month of 7.8%. There was an increase in homebuilder sentiment, but mortgage applications declined. This week the economic calendar is a little quieter, but we will be watching the numbers for existing and new home sales. In addition, the earnings calendar will shift into a higher gear this week with 143 of the S&P 500 companies scheduled to report.