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Stock Market Wrap-Up: October 24, 2024 – A Day of Rebound and Caution
As the stock market closed on October 24, 2024, investors were greeted with a mix of rebounding stocks and lingering caution, reflecting the complex interplay of economic indicators, corporate earnings, and Federal Reserve expectations.
Market Movements: A Rebound After the Sell-Off
After a steep downturn on Wednesday, the U.S. stock market showed signs of recovery. The S&P 500 and Nasdaq were on track to open higher, with futures tied to these indices rising 0.5% and 0.9%, respectively, ahead of the opening bell. However, the Dow Jones Industrial Average futures were down 0.2%, setting a cautious tone for the day.
The previous day's sell-off, which saw the Dow Jones Industrial Average drop by 409.94 points (1%) to 42,514.95, the Nasdaq Composite fall by 296.47 points (1.6%) to 18,276.65, and the S&P 500 decline by 53.78 points (0.9%) to 5,797.42, was largely driven by rising treasury yields and concerns over the pace of Federal Reserve rate cuts.
Tesla Leads the Charge
One of the standout performers of the day was Tesla ($TSLA), whose shares surged 13% in premarket trading following the company's better-than-expected earnings report. Tesla's announcement of plans for new, more-affordable models set to start production next year added to the optimism, making it one of the top gainers in the premarket session.
Tech Stocks Bounce Back
Other large-cap tech stocks, which had led the previous session's declines, also saw significant gains. Nvidia ($NVDA), Apple ($AAPL), Microsoft ($MSFT), Alphabet ($GOOGL), Amazon ($AMZN), and Meta Platforms ($META) were all gaining ground ahead of the bell. This rebound was a welcome relief after these tech giants had suffered losses in the previous trading session.
Economic Indicators and Fed Expectations
Investors were closely watching several economic indicators released during the day, including data on new-home sales and weekly jobless claims. These figures are crucial as they provide insights into the health of the U.S. economy and can influence the Federal Reserve's decisions on interest rates.
The yield on 10-year Treasurys, which is closely correlated with expectations around interest rates, stood at 4.19% on Thursday morning, down slightly from 4.24% the previous day. However, this yield has been on the rise, reflecting market expectations that the Fed may not cut interest rates as aggressively as previously anticipated.
Richmond Fed President Thomas Barkin's comments added to the caution, suggesting that the central bank's target to limit inflation at 2% might take longer than expected to achieve, which could limit the extent of interest rate cuts.
Consumer Spending and Real Estate
Despite the market volatility, consumer activity remains robust. Spending on services continues to outpace spending on goods, with affluent U.S. consumers, particularly Millennials and Gen Z, increasing their spending by 12%. Low unemployment and steady wage growth are positive indicators for consumer health, although companies have noted a weakening demand in recent months.
In the real estate sector, multifamily rent growth is expected to benefit from contracting supply in commercial real estate. The Midwest and Northeast markets have seen significant jumps in rent growth due to limited new supply and national GDP growth.
Corporate Earnings and Sector Performance
The third-quarter earnings season has been mixed, with Q3 earnings growth expected to be the lowest year-over-year growth rate since mid-2023. However, analysts are optimistic about a strong reacceleration in Q4 earnings. United Parcel Service ($UPS) reported better-than-expected results, leading to a 7% increase in its shares. On the other hand, Boeing ($BA) faced a 4% decline after its machinists rejected a new contract offer, extending a crippling six-week strike. International Business Machines ($IBM) and Honeywell ($HON) also reported disappointing results, leading to declines in their stock prices.
Sector Performance
The tech sector, despite its rebound, remains under scrutiny due to rising treasury yields and concerns about future rate cuts. The Consumer Discretionary Select Sector SPDR ($XLY), the Technology Select Sector SPDR ($XLK), and the Communication Services Select Sector SPDR ($XLC) fell 1.6%, 1.4%, and 0.8%, respectively, in the previous trading session. However, the Real Estate Select Sector SPDR ($XLRE) rose 1%, indicating some resilience in the real estate sector.
Fear and Greed Factors
The fear-gauge CBOE Volatility Index ($VIX) increased by 5.7% to 19.24, reflecting ongoing market anxiety. The higher volume of trading, with 11.8 billion shares traded on Wednesday, also indicated heightened investor activity. Decliners outnumbered advancers by a 3.27-to-1 ratio on the NYSE, while the Nasdaq Composite recorded 60 new highs and 90 new lows.
Gold and Oil Prices
Gold futures edged up slightly, nearing all-time high levels around $2,750 an ounce. Oil prices, however, slid more than 1% after U.S. commercial crude oil inventories increased by 5.5 million barrels from the previous week. Brent crude settled at $74.96, down $1.08, or 1.42%, while WTI crude settled down 97 cents, or 1.35%, to $70.77.
Conclusion
The stock market on October 24, 2024, was a tale of two narratives: one of rebound and optimism, driven by strong corporate earnings and consumer spending, and another of caution, fueled by rising treasury yields and uncertain Fed expectations. As investors navigate this complex landscape, they must remain vigilant, watching closely for economic indicators and corporate performance that will shape the market's future trajectory.
In this dynamic environment, where tech stocks bounce back and real estate shows signs of resilience, the key to success lies in understanding the interplay between economic data, corporate health, and monetary policy. As the market continues to evolve, one thing is clear: the path forward will be marked by both opportunities and challenges, requiring investors to be informed, adaptable, and strategic in their decisions.
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