Wednesday, October 30, 2024

Markets edge higher on earnings, GDP and jobs data

Dow gained 130, advancers over decliners 5-2 & NAZ went up 29.  The MLP index stayed in the 283s & the REIT index added 2 to 430.  Junk bond funds hardly budged & Treasuries had a little buying taking yields a little lower (more below).  Oil was up 1 to the low 68s following recent selling & gold gained 9 to 2790.

Dow Jones Industrials

Companies in the private sector added 233K jobs in Oct, payroll processing firm ADP said.  The figure is well above estimates of 114K jobs, the highest since Jul 2023.  Sep's larger-than-expected increase was revised higher to 159K.  Large businesses, those with 500 or more employees, added 140K jobs in the month.  Businesses with 50 - 499 employees hired 86K workers & establishments with fewer than 50 employees added 4K jobs.  The education & health services sector added the most jobs in Oct (53K) while trade, transportation & utilities added 51K.  The leisure & hospitality sector added 37K jobs in the month.  Hiring in the construction & natural resources/mining sectors totaled 37K & 4K, respectively.  The only sector to report losses in Oct was manufacturing, which saw a decline of 19K.  Job creation was concentrated in the South, where 77K jobs were added.   The Midwest added 63K jobs while the Northeast & West added 48K & 44K jobs, respectively.  ADP also said wages grew 4.6% from a year ago.

Private sector job growth beats predictions, ADP says

Business investment rose by 0.3% in the 3rd-qtr as private inventory investment slowed & residential fixed investment decreased more significantly.  The report showed that current-$ personal income increased by $221B in the 3rd-qtr, a smaller rise than the $316B in the 2nd-qtr, with the increase primarily reflecting a rise in compensation.  Disposable personal income rose by $166B (3.1%) in the 3rd-qtr after it rose by $260B (5%) in the prior qtr.  Personal saving was $1.04T in the 3rd-qtr, down slightly from $1.13T in the 2nd-qtr, while the personal saving rate also declined from a qtr ago – coming in at 4.8% in the 3rd-qtr compared to 5.2% in the previous qtr.  "The increase in Q3 GDP is even better than it appears as real final sales to domestic purchasers matched their largest gain since the first three months of 2023," said Ryan Sweet, chief US economist at Oxford Economics.  "Though GDP is backward-looking, it sends a clear message that the economy is doing well, and inflation is moderating, good news for the Federal Reserve."  Stronger than expected labor market & inflation data over the last month has caused markets to move away from expecting another 50 basis point cut to anticipating a smaller cut in Nov.

US economy grew 2.8% in the third quarter, slower than expected

The yield on the 10-year Treasury note hovered near a 3-month high as traders combed thru a fresh batch of mixed data & hunted for further clues on the rate cut outlook.  The 10-year Treasury yield was down about 1 basis point at 4.26%, after briefly rising above 4.3% in the previous session to notch its highest level since Jul & the yield on the 2-year Treasury rose more than 2 basis points to 4.146%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Iinvestors monitored mixed economic data (above).  The Fed joined several other major central banks in easing monetary policy when it lowered rates by 50 basis points in Sep.  Policymakers are currently in a blackout period ahead of the Nov 6-7 meeting, which means they will not be delivering remarks off the back of the data releases, or about their general policy & economic expectations.

10-year Treasury yield hovers near 3-month high as traders digest economic data

Fresh gov data showed that US economic growth slowed slightly last qtr to a 2.8% annualized pace, slightly under the forecast.  The data revealed, however, that consumers have kept spending at a robust pace as inflation continues to fall.  Also, the ADP report found US private payroll growth surged in Oct, adding more data into the mix for investors to digest.

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