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Weekly Update – October 25, 2019

  • U.S. stocks regrouped from midweek doldrums to post their third week of gains, after reports on Friday that the United States and China had made progress in trade discussions. Stocks also got a lift from better than expected 3Q19 earnings results. Pressured by global manufacturing weakness, the Dow Jones Industrial Average faced a loss on the week but rebounded in Friday’s session.
  • U.S. Treasury yields had fallen midweek but jumped on Friday as stocks accelerated. The ten-year note yield closed at 1.80%, up from 1.75% the week before. Oil and gold prices rose. The U.S. dollar gained against a basket of major currencies.
  • With 39.8% of S&P 500 companies reporting third-quarter results, 78.4% have exceeded earnings per share expectations, while 60.9% have beaten revenue expectations. As of October 25, 2019, Refinitiv estimated the S&P 500 index’s third-quarter earnings growth rate at -2.0% and its 12-month forward P/E ratio at 17.3. Biogen, Boston Scientific and Procter & Gamble impressed, whereas Caterpillar, Hasbro and Texas Instruments disappointed.
  • Existing home sales dropped in September to 5.38 million units, below August’s 5.50 million pace. Nonetheless, sales were up 3.9% year-over-year. The release noted less help from lower mortgage rates, with limited housing stock a constraint. September new home sales hit 701,000, a drop from August’s 713,000 pace.
  • September durable goods orders fell 1.1% versus August’s 0.3% gain. Core capital goods orders (nondefense, ex-aircraft) were down 0.7% versus an expected rise of 0.4%; August was revised down from 0.1% to -0.4%.
  • Markit’s flash October manufacturing PMI reading was 51.5 versus September’s 51.1, representing the fastest expansion in six months. The flash October services PMI read 51.0, a touch better than the prior month’s 50.9.
  • Markit Eurozone manufacturing PMI was unchanged at 45.7 in October, while Eurozone services PMI improved to 51.8, a two-month high. Markit said its latest readings pointed to a quarterly Eurozone growth rate just below 0.1%.
  • Markit Japan manufacturing PMI fell to 48.5 in October from 48.9 in September, the weakest reading since June 2016. Japan composite PMI fell into contraction. South Korea’s GDP expanded 0.4% in 3Q19, down from 1.0% in 2Q19.

CPWM Weekly Market Monitor (2019.10.25)

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