Markets Insights

Global stock markets experienced mixed movements last week, with the Nasdaq climbing to an all-time high amid Big Tech earnings announcements and days away from the U.S. Presidential election.

The stock market experienced a mixed performance. After a six-week winning streak, major indices saw some losses. The S&P 500 dropped 0.8% for the week, marking its biggest decline since early October. The Dow Jones Industrial Average and Nasdaq Composite also faced minor declines, despite a late-week rally. The market faced pressure from concerns about economic conditions and interest rates.

The stock market showed strong upward momentum during the week ending October 18, 2024, bolstered by positive earnings reports and solid economic data. The S&P 500 rose approximately 0.8%, maintaining its upward trend, while the Dow Jones Industrial Average and NASDAQ also made gains.

The stock market saw a positive rally despite mixed economic signals. The S&P 500 gained 1.4%, driven by strong earnings reports from big banks and sectors like technology and transportation. This occurred despite mid-week inflation data, which raised questions about future Federal Reserve rate cuts. In response to inflation concerns, U.S. Treasury yields rose, reflecting investor caution about the economic outlook.

Markets were resilient as September and the third quarter closed, registering gains despite economic and political uncertainties. The S&P 500 and Nasdaq closed Monday, September’s last trading day, up 0.4%, while the Dow Jones gained nearly 0.1%. The S&P 500 notched its 42nd all-time high for the year, making it the best September since 1997 and the best start to an election year ever.

September is historically the worst month for the U.S. stock market, but stocks may be poised for September’s first gain since 2019. U.S. indices were positive this week after celebrating the Fed's supersized 50 bps interest rate cut – its first in four years.

The Fed kept rates close to zero for nearly a decade following the 2008-09 global financial crisis, then took them above 2% before heading back toward zero during the Covid-19 pandemic. When a combination of stimulus cash, rebounding consumer demand, and supply chain kinks sent inflation to double-digit percentages, the Fed quickly raised rates to their recent peak to cool demand.

U.S. stocks closed out their best week of the year with more gains on Friday and climbed to the cusp of their records. The S&P 500 rose 0.5% for a fifth straight gain and is just 0.7% below its high set in July.

Its fourth consecutive daily decline, leaving the index down about 4.2% for the week, its worst week since March 2023.

The investment community is expecting an interest rate cut on September 18. Avi Salzman, a Barron’s writer, thinks it increasingly looks like a “sell the news” event—particularly if the cut is a quarter percentage point instead of a half.