Week In Review

It was a comparatively disappointing week for domestic financial markets. The October 2024 release of the Fed Beige Book was less than supportive of market momentum, as the survey sentiment across the twelve bank districts was generally mixed regarding economic and business activity. Corporate earnings from bellwether companies didn’t help much either, with lackluster performance results from Coca-Cola, Union Pacific, IBM, Honeywell International, Verizon, and Lockheed Martin, to name a few. Tesla and Philip Morris were noteworthy beacons of light, with profits surpassing analyst estimates by 24% and 11%, respectively, but it wasn’t enough to buoy the S&P 500 index. 3 Nonetheless, the biggest headwind for equities is rising bond yields. Recent robust economic data has elicited rhetoric from the Federal Reserve that is less dovish, prompting bond investors to tamp down expectations for near-term interest rate cuts. Additionally, both U.S. presidential candidates appear to have their sights set on economic policies that would increase government spending and inflation. The S&P 500 index succumbed to uncertainty, declining -1.0%.

This Week

This is a data-intensive week just before the national election that has the potential for generating market volatility. Headlines under consideration include consumer confidence, Q3 GDP, the PCE price index, and the employment report. The Q3 earnings season continues with 169 S&P 500 companies providing updates, including 10 of the Dow Jones Industrials. 4

Portfolio Themes

The Municipal/Treasury Ratio compares the current yield of a municipal bond to a comparable U.S Treasury bond. It is a common barometer for relative value in the municipal bond market. However, a review of the taxable equivalent yield in the context of its historical range gives added insight. Simplicity offers access to municipal bond portfolios that provide an opportunity to lock in high current yields and allay reinvestment risk.

_________________________________________________________________________________

Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts. Portfolio Themes chart sourced from Columbia Threadneedle.

1Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums.

2 Index Statistics: P/E TTM – Calculated by dividing an investment’s price by the trailing 12-month earnings per share value. Yield – Expected dividend-per-share divided by current share price. Table statistics are updated monthly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX). Past performance does not guarantee future results.

3 CNBC.

4 FactSet.

Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication.