A powerful two-day stock rebound cemented a positive week for investors as a new trading month began.
The Dow Jones Industrial Average rose 1.99%, while the Standard & Poor’s 500 added 1.51%. The Nasdaq Composite index increased 0.73% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 3.42%.1,2,3
Stocks Start Strongly
Stocks opened the week posting their best two-day rally since March 2020, as the U.K. prime minister’s decision to reverse a tax cut proposal that had upended financial markets the previous week lifted investors.4
Falling yields further lifted investor enthusiasm, as did new economic data indicating a cooling economy. Losses in the last two days erased much of the gains as concerns about higher rates and recession once again moved front and center. The selling pressure was due to a stream of hawkish comments by Fed officials and labor market data that suggested the Fed would likely stick with its rate-hike plans.
A Mixed Labor Picture
Employment-related reports offered conflicting signals on the state of the labor market. In a sign of cooling, the number of open jobs in August fell 10%, while a subsequent report from Automated Data Processing (ADP) showed continued labor market strength. ADP reported private employers added a higher-than-anticipated 208,000 jobs in September, and annual wages rose 7.8% from a year ago.5,6
Jobless claims rose to 219,000, up from the previous week’s 190,000 and in line with 2019’s average. September’s employment report showed that employers added 263,000 jobs–slightly lower than expectations. The combination of new hiring and lower labor force participation led to a drop in the unemployment rate to 3.5%.7,8
This Week: Key Economic Data
Wednesday: Producer Price Index (PPI). Federal Open Market Committee (FOMC) Meeting Minutes.
Thursday: Consumer Price Index (CPI). Jobless Claims.
Friday: Retail Sales.
Source: Econoday, October 7, 2022
This Week: Companies Reporting Earnings
Wednesday: Delta Air Lines, Inc. (DAL), PepsiCo, Inc. (PEP).
Thursday: Wells Fargo & Company (WFC), Walgreens Boots Alliance, Inc. (WBA), BlackRock, Inc. (BLK).
Friday: JPMorgan Chase & Co. (JPM), UnitedHealth Group, Inc. (UNH), Citigroup, Inc. (C), Morgan Stanley (MS), The PNC Financial Services Group, Inc. (PNC), U.S. Bancorp (USB).
Source: Zacks, October 7, 2022
Essential Tax Reminders for People Selling a Home
If you’re selling your home, you may be able to exclude all or part of any gain from the sale when filing your tax return. To see if you are eligible for this benefit, you have to consider:
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov9
A man leaves home and makes three left turns. He comes home again and sees two masked men waiting for him, but he jogs straight toward them with a smile as others cheer. Why is this man so unafraid?
Last week’s riddle: Seven people stand in a square room which measures 30' x 30'. Each one can see the entire room and everyone in it without making any physical movement (aside from eye movement). Where inside this room can you place an apple so that all but one person can see it? Answer: Place the apple atop one person's head.
Footnotes and Sources
2. The Wall Street Journal, October 7, 2022
3. The Wall Street Journal, October 7, 2022
4. CNBC, October 3, 2022
5. The Wall Street Journal, October 4, 2022
6. CNBC, October 5, 2022
7. The Wall Street Journal, October 6, 2022
8. CNBC, October 7, 2022
9. IRS.gov, May 19, 2022
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Weekly Market Insights: Boost Early in Week Keeps Markets Ahead
October 10, 2022