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Equity and credit markets declined last week as the relentless move higher in interest rates exerts downward pressure on valuations. The sharp increase in yields is putting pressure on every borrower with near-term maturities to refinance, and the United States government is no exception. Weak demand during recent Treasury long-bond auctions is one indication that investors can expect more periods of challenging liquidity conditions ahead.
This week’s economic calendar includes more important data points on the state of the U.S. economic growth and inflation. The initial read on third-quarter gross domestic product (GDP) will be released on Thursday.1 Third-quarter economic growth is expected to come in at 4.3%, more than double the GDP prints during the first and second quarters.2,3 Federal Reserve policymakers will be looking for more signs of improvement on the inflation front in Friday’s personal consumption expenditures (PCE) report.
After the S&P 500 Index closed below some key technical support levels last week, earnings this week from a number of this year’s market-leading large cap technology names take on added significance. Microsoft and Alphabet are set to report earnings on Tuesday, followed by Meta on Wednesday and Amazon on Thursday.4
Sources:
1MarketWatch – U.S. Economic Calendar; as of 10/23/23
2Forbes – Earnings Soften And Yields Bite Stocks; 10/22/23
3Bureau of Economic Analysis – Gross Domestic Product, Second Quarter 2023; August 2023
4Investor’s Business Daily – Dow Jones Futures Fall As 10-Year Treasury Yield Tops 5%; Microsoft, Titans Lead Earnings Wave; 10/23/23
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