Equities were higher across all the major global indices. The US benchmark – the S&P 500 – rose 1.84%, the Russell 2000 added 1.47% and the NASDAQ gained 2.18%. Overseas, the developed markets (MSCI EAFE) rose 2.42% while the emerging markets (MSCI EM) gained 2.13%. In the US, mid- caps outperformed other equities by size, and growth stocks outperformed value stocks. Materials and consumer discretionary were the best performing sectors while communication services and health care were the laggards.1
Interest rates declined for the benchmark 10-year treasuries by 2 basis points to 1.59%. The yield curve flattened as the rates on 2-year treasuries rose 9 basis points to 0.41% and those on the 20-year maturities declined by 9 basis points to 2.02%.2
Oil prices continued to rise for the 8th consecutive week, with West Texas crude ending the week up 3.0% to $81.73 per barrel.3 Price gains were driven by shortages for other energy– natural gas and coal – while the globe attempts to ramp up economic activity post-Covid. Meanwhile the leading oil producing countries (OPEC+) are keeping supplies tight.
Inflation for September was 5.4% on a year over year basis, a tick higher than the prior month, as supply chain bottlenecks continue. Energy rose 24.8% over the last twelve months. Excluding volatile food and energy, the core consumer price index rose 4.0%4. Because of higher inflation, Social Security monthly benefits will increase by 5.9% beginning in January, the largest increase in nearly 40 years.5
Producer prices rose faster than consumer prices last month. The index of producer prices rose 8.6% over the last twelve months while core PPI (excluding food, energy and trade services, rose 5.9%. The difference between producer and consumer prices indicates weaker profit margins for manufacturers.6 A record number of employees quit in August, 4.3 million. The quit rate climbed to 2.9% from a seven-year low of 1.8% during the height of the Covid crisis. The quits occurred as employers are seeking to fill 10.4 million job openings.7
Goldman Sachs (GS), a Core Select holding, beat revenue and earnings estimates by a wide margin due to strength in their investment banking and trading operations. Shares rose 3.38% last week.9
Taiwan Semiconductor Manufacturing (TSM), a G40i holding, reported quarterly revenues and earnings that exceeded consensus expectations and raised revenue guidance for the coming quarter. 10 The company also said it will build a semiconductor plant in Japan.11 Shares rose 4.38% for the week.
UnitedHealth Group Inc. (UNH), a G50 and Core Select holding, reported quarterly revenues and earnings that exceeded consensus expectations and raised revenue and earnings guidance for the coming quarter and the coming year. Shares rose 4.80% last week.12
Did you know…
Today’s regular Slinky has approximately 65 feet of wire if you would be able to stretch it all out. The original Slinky came out in 1945 and contained 80 feet of wire.
Mariann Montagne, CFA
8 All weekly changes in company stock prices: Yahoo Finance
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