This Weekly Financial Markets Update reviews the top market headlines: Consumer Spending Powers Strong Q3 GDP Growth, Consumer Sentiment Slips Again in October, NASDAQ Composite Index Marks a Correction

Top Three Market Headlines

China's Exports Signal Further Cooling: China's economy faced continued pressure in October, with the amount of exports falling 6.4% from the prior year. This was the sixth straight month in which exports from the world's second-largest economy declined, reflecting slowing global growth that has hampered demand for finished Chinese goods. The weakness in exports joins other recent pressures on China's economy, including slowing construction and services sector activity. The Chinese government has responded by enacting multiple stimulus measures, including fewer restrictions on home purchases and lower interest rates.

Disorderly Treasury Auction Unnerves Markets: A routine auction of U.S. Treasury bonds went awry last Thursday after meeting resistance from buyers. The Treasury issued $24 billion of 30-year bonds at a maximum yield of 4.769%, higher than where such bonds were trading in the open market, suggesting that purchasers required a premium to buy the new bonds. In addition, primary dealers, large banks that serve as buyers of last resort, ended up taking 25% of the offering, more than twice the trailing 12-month average. The weak auction briefly rattled markets, with the S&P 500 dropping more than 1% from midday highs, as it suggested mounting concern about the supply of U.S. Treasury debt amid wide U.S. federal budget deficits.

S&P 500 Earnings Growth Resumes in Q3: With more than 90% of S&P 500 companies having reported their Q3 2023 earnings, the blended year-over-year earnings growth rate for the group stands at 4.1%. This exceeds analysts' expectations at quarter-end for a -0.3% decline and is the first quarter showing growth since Q3 of 2022. However, investors have been less forgiving of disappointing results, as companies issuing negative earnings surprises have seen an average stock price drop of -4.6% versus the 5-year average of -2.3%. Moreover, analysts' estimates for future earnings have declined as Q3 results have rolled in, as the current estimated Q4 growth rate of 3.2% is down sharply from 8.0% on September 30.

As of November 13, 2023 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 1.75% 1.55% 11.76% 11.58%
S&P 500 2.31% 3.12% 16.60% 13.47%
Russell 2000 -0.47% -4.35% -1.92% -7.25%
MSCI EAFE 0.34% -0.85% 6.17% 10.48%
MSCI Emerging Markets 1.93% -0.37% 1.44% 9.47%
FTSE NAREIT -0.49% -1.11% -3.23% -7.13%
Bloomberg Commodity -3.16% -2.47% -5.83% -7.88%
Barclays U.S. Aggregate 0.40% 0.39% -0.82% 0.44%