Market Updates
.png)
.png)
Categories:
Key areas of focus
- The federal government shutdown continues to weigh on data availability, limiting insight into the health of the U.S. economy. Both the September and October jobs reports have been delayed, and the advanced estimate for third-quarter GDP was not released. Additional reports on construction spending, trade flows, and factory orders have also been postponed, reducing visibility into recent economic trends.
- Yields have continued to climb, with the long end of the curve continuing to remain sticky. The 10-year yield reached as high as 4.17% last Wednesday before easing slightly later in the week. If yields remain elevated, they could limit the potential tailwind many investors expect for risk assets heading into year-end.
- The rally in mega-cap tech stocks faded this week with renewed doubts about AI momentum sparking broad weakness across the market. The NASDAQ fell 3.0%, while the S&P 500 and Dow declined 1.6% and 1.2%, respectively. Technology was the weakest sector falling more than -4.1% for the week.
Week in review
Markets finished the week lower, with the Nasdaq Index posting its worst weekly performance since April as investors weighed data on manufacturing, employment, and consumer sentiment amid a government shutdown. The week began with Monday’s ISM Manufacturing Index declining to 48.7, marking an eighth straight month of contraction. A reading above 50 indicates the sector is expanding compared to the previous month while a reading below 50 suggests a contraction. By Wednesday, stocks recovered slightly following a stronger-than-expected ADP report showing private sector job growth of 42k compared to the 30K median forecast. The September number was also revised upwards from -29K to +3K. Meanwhile, the ISM Services Index rebounded to 52.4 from 50 a month prior, with mentions of tariff headwinds down sharply from prior months. By Friday, equities extended losses. The Consumer Sentiment index dropped to 50.3 – its second lowest reading since 1978. Separately, data released by the Fed showed consumer credit rising to $13.1B, suggesting households are increasingly relying on credit.
Spotlight
Economists closely track the economic health of the consumer given that consumer spending makes up about 70% of U.S. GDP. The ongoing government shutdown has delayed both the September and October jobs reports, making it increasingly difficult to gauge the health of the consumer. With fewer official data releases, investors have turned to corporate earnings and private surveys for insights. Meanwhile, the impact is beginning to show up in daily life with SNAP benefits reduced and the FAA forced to cut capacity at 40 airports last week due to unpaid air traffic controllers. Among corporate America, a mixed picture is emerging. Warby Parker pointed to weakness among lower-income shoppers, McDonald’s saw higher-income customers driving gains while lower-income traffic fell, and CAVA cited fewer visits from younger consumers. Wingstop noted softer demand among Hispanic, low-income, and some middle-income households across regions. While these headwinds could prove temporary, they highlight signs of potential strain beneath the surface worth monitoring.
Markets
Sectors
Style & Market Cap
Sources
- ISM ManufacturingInstitute for Supply Management, Institute for Supply Management (ISM) Purchasing Managers Index (PMI) Manufacturing Report, retrieved from ISM, https://www.ismworld.org/supply-management-news-and-reports/reports/ism-pmi-reports/pmi/october/
- ADP ReportADP Research, ADP National Employment Report, retrieved from ADP, https://adpemploymentreport.com/
- ISM ServicesInstitute for Supply Management, Institute for Supply Management (ISM) Purchasing Managers Index (PMI) Services Report, retrieved from ISM, https://www.ismworld.org/supply-management-news-and-reports/reports/ism-pmi-reports/services/october/
- Consumer SentimentSurveys of Consumers, University of Michigan Consumer Sentiment Index Summary, retrieved from University of Michigan, https://www.sca.isr.umich.edu/
- Consumer CreditBoard of Governors of the Federal Reserve System, Consumer Credit – G.19, retrieved from The Federal Reserve, https://www.federalreserve.gov/releases/g19/current/
Market Data
Morningstar Direct using Morningstar Indices
Authors:
Anthony Silva
CFA®
Senior Director of Strategy Management
World Investment Advisors, LLC