A week filled with significant events impacting the markets culminated in an unexpectedly strong September jobs report.
The U.S. Congress managed to avoid a dramatic government shutdown just hours before the midnight deadline Oct. 1 by passing a stopgap funding bill. This bill ensures the continuation of government operations through Nov. 17, excluding new funding for border security and Ukraine. On Tuesday, the House of Representatives made a historic decision to oust Speaker Kevin McCarthy, following a motion initiated by Rep. Matt Gaetz (R-FL) in response to McCarthy’s collaboration with Democrats to prevent a government shutdown.
Throughout the week, yields across the Treasury curve continued to rise. The 10-year Treasury yield surged past 4.75%, reaching its highest level in 16 years. On Friday, the 30-year yield crossed the 5% threshold, driven by a jobs report that exceeded expectations. Funds and ETFs investing in long-dated Treasury bonds such as the PIMCO 25 Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund (NYSE:ZROZ) or the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) have now lost more than 50% of their value since March 2020.
The September jobs report showed stronger-than-anticipated employment growth. Non-farm payrolls increased by 337,000 last month, marking the largest monthly gain since January and far surpassing the expected 170,000. August NFPs were revised upward to 227,000, indicating a robust pace of hiring throughout late summer. As a result of the impressive jobs number, economists now see rising risks of further Federal Reserve tightening this quarter.
On the consumer front, Walmart reported a decrease in shopping demand attributed to the use of weight-loss and appetite-suppressing drugs such as Ozempic and Wegovy, manufactured by Novo Nordisk A/S (NYSE:NVO). Shares of beverage giants like The Coca-Cola Company (NYSE:KO) and PepsiCo Inc. (NYSE:PEP) had their worst-performing week since May 2022.
Oil giant Exxon Mobil Corp. (NYSE XOM) is considering acquiring Pioneer Natural Resources Company (NYSE:PXD) to strengthen its position in the U.S. energy sector. The potential agreement could be valued at up to $60 billion, potentially making it the largest takeover in the world this year. Shares of the target company, Pioneer, rose by as much as 10% on Friday.
The S&P 500, tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY), rebounded from four consecutive weeks of declines. Similarly, the Nasdaq 100, monitored via the Invesco QQQ Trust (NASDAQ:QQQ), posted weekly gains and recorded its strongest session since late August on Friday.
Notable sectors that displayed strength this week included the Technology Select Sector SPDR Fund (NYSE:XLK), which rose by 3%, the Communication Services Select Sector SPDR Fund (NYSE:XLC), gaining 2.1%, and the Health Care Select Sector SPDR Fund (NYSE:XLV), which registered a 1.1% increase.
Among the mega-cap stocks in the S&P 100, top performers for the week included Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), Nvidia Corp. (NASDAQ:NVDA), Eli Lilly & Company (NYSE:LLY), and Meta Platforms Inc. (NASDAQ:META), all of which posted gains exceeding 5%. NextEra Energy Inc. (NYSE:NEE) was the laggard, down over 12% for the week.
All eyes are on the Consumer Price Index report for September set to be released on Thursday. This report will mark the last crucial piece of economic data ahead of the Nov. 1 Fed meeting. Economists predict that the annual inflation rate will slightly ease from 3.7% to 3.6% in September, and core inflation is expected to fall from 4.3% to 4.1% on a year-over-year basis.
Other relevant economic releases include the Producer Price Index report on Wednesday, where a monthly decline from 0.7% to 0.3% is expected, and the Michigan Consumer Sentiment estimate for October on Friday.
On the earnings front, PepsiCo will report on Tuesday, while Thursday will feature Infosys Limited (NYSE:INFY), Fastenal (NASDAQ:FAST), Delta Air Lines (NYSE:DAL), Walgreens Boots Alliance (NASDAQ:WBA), and Domino’s Pizza (NYSE:DPZ). Some major financial institutions will report Friday, include JPMorgan Chase & Co. (NYSE:JPM), BlackRock (NYSE:BLK), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), PNC Financial Services (NYSE:PNC), along with UnitedHealth Group (NYSE:UNH), and The Progressive Corp (NYSE:PGR).
Produced in association with Benzinga
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