Weekly Recap | October 10, 2022

October 3-7, 2022 Recap

Tale of Two Halves

Roller Coaster Week Ends Net Positive
U.S. stocks snapped a three-week losing streak in which the S&P 500 surged over 5% in the first half of the week, delivering its best two-day gain since 2020. However, a stronger-than-expected payrolls report on Friday together with an unemployment rate decline has all but sealed an outlook for further aggressive future rate hikes from the Federal Reserve. Additionally, fuel costs are rising after OPEC+ oil ministers announced it will cut oil production by 2 million barrels/day.

For the Week…
The S&P 500 gained 1.56%, the Dow Jones Industrial Average rose 1.99% and the tech-heavy Nasdaq Composite added the least, up 0.75%. The gains trimmed deep three-week losses in which the S&P 500 had lost around 12%.

Jobs Growth Slows
New nonfarm payrolls slowed to 263K in September from 315K in August, while July hiring was upwardly revised by 11K. The unemployment rate declined to 3.5% from 3.7%. Average hourly earnings for all areas of employment rose by 0.3%. Over the past 12 months, average hourly earnings have increased by 5.0%, but are down from 5.2% Y/Y reported the month prior.

Energy Jumps Double Digits
Seven of the 11 major S&P 500 sector groups posted gains, led by Energy (+13.86%), Industrials (+2.87%) and Materials (+2.15%). The Real Estate sector (-4.06%) fell the most, followed by Utilities (-2.63%) and Consumer Discretionary (-1.11%). Boosted by a jump in crude oil prices, Energy is now up 53.64% YTD,

Treasury Yields Climb
Treasury yields advanced last week with the benchmark 10-year Treasury yield ending Friday at 3.883%, up from 3.796% the week prior. The U.S. Dollar Index more than retraced a 1% prior week decline, strengthening by nearly 1.2%. The dollar index is up nearly 20% over the last 12 months.

The Latest from @CeteraIM

Wages, a Fed Focus

Historical Treasury Yields

Jobless Claims Rise

Economic Calendar

Monday, October 10
No Major Releases, Columbus Day holiday.

Tuesday, October 11
NFIB Small Business Optimism.

Wednesday, October 12
Mortgage Activity, Producer Prices, FOMC Minutes.

Thursday, October 13
Jobless Claims, Consumer Prices.

Friday, October 14
Retail Sales, Import/Export Prices, Consumer Sentiment.

The economy has dealt with a lot of headwinds this year, largely stemming from high inflation and tighter monetary policy, leading to economic activity stalling on an inflation-adjusted basis. The good news is the labor market recovery remains on solid footing. While jobs growth slowed last month to 263,000, it was still solid when compared to average jobs growth during the prior expansion. Average monthly jobs this year are lower than last year but are more than double the average in the last decade from 2010 to 2019.

^{This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.}

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^Glossary

^{The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.}

^{The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.}

^{The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index}

^{The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.}

^{The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Bloomberg US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.}

^{The Bloomberg US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.}

^{The Bloomberg US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.}

^{The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.}

^{The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.}

^{The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.}

^{The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.}

^{The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.}

^{The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.}