The stock market had a case of the jitters this week, mostly trading lower as investors decided to take some profits off the table after a stellar third quarter. But that wasn’t the only thing making waves. The geopolitical landscape took a turn for the dramatic when Iran decided to play a game of missile tag with Israel, prompting promises of retaliation. As you might expect, this sent oil prices soaring faster than a teenager’s heart rate at their first school dance.
Speaking of oil, WTI crude futures jumped from $68.15 per barrel last Friday to $74.40 this Friday. This surge gave the S&P 500 energy sector a nice 7% boost for the week. It’s moments like these that remind me of Warren Buffett’s sage advice: “Be fearful when others are greedy, and greedy when others are fearful.” In times of geopolitical uncertainty, it’s crucial to keep a level head and look for opportunities amidst the chaos.
Treasury yields saw a sharp increase across the board. The most notable changes were:
- The 10-year Treasury yield jumped by 23 basis points, settling at 3.98% by the end of the week.
- The 2-year Treasury yield saw an even more dramatic rise, increasing by 37 basis points to close at 3.93%.
This upward movement in yields reflects a shift in investor sentiment and expectations about future economic conditions and monetary policy.
Despite the week’s turbulence, the three major indices managed to eke out fractional gains by Friday’s close. The catalyst? The September Employment Situation Report painted a picture of a resilient job market. This report showed stronger-than-expected hiring, a dip in unemployment, and a bump in average hourly earnings. It’s the kind of news that makes economists do a little happy dance because it fits nicely with the “soft landing” narrative we’ve all been hoping for.
US Market Highlights
- U.S. job growth surprised us all by adding 254,000 payrolls, leaving forecasts of 150,000 in the dust. The unemployment rate dipped to 4.1%, while wages climbed 4% year-over-year. It’s like the job market decided to flex its muscles and show us it’s still got plenty of oomph.
- Job openings bounced back to 8.04 million in August, giving us a collective sigh of relief that the labor market isn’t falling apart. However, the slower hiring and fewer resignations suggest that things might be cooling off a bit. It’s like watching a pot of water that’s been boiling – it’s still hot, but the bubbles are getting smaller.
- The service sector decided to throw a party, with the ISM index jumping to 54.9. Meanwhile, manufacturing is still sulking in the corner at 47.2, but lower input prices are giving it a glimmer of hope.
- U.S. port workers finally shook hands on a tentative wage deal, ending their strike and calming fears of supply chain chaos. They scored a 61.5% wage hike over six years – not too shabby!
- Tesla hit a speed bump this quarter, delivering 463K vehicles – up just 6% from last year. It seems the competition is starting to catch up, especially in China. Tesla shares took a 3.5% hit this week, reminding us that even the mighty can stumble.
- Nike decided to play it safe by withdrawing its full-year guidance and postponing its investor day. With revenue down 10% to $11.6B and sales slumping across key franchises, it looks like Nike might need to lace up its running shoes and sprint to catch up.
Global Highlights
- Iran decided to spice things up by launching a missile attack on Israel. Most missiles were intercepted, but tensions are higher than a cat’s back in a dogfight. This geopolitical chess game sent crude oil prices surging nearly 10% this week.
- China’s manufacturing sector is feeling under the weather, contracting at its fastest rate in 14 months. Even with recent stimulus measures, it seems the factory confidence is lower than a limbo stick at a beach party.
- The Eurozone got some good news on the inflation front, with rates dropping to 1.8% in September, below the ECB’s 2% target. This might just pave the way for more rate cuts in October.
- Samsung is tightening its belt, planning to cut thousands of jobs globally as it struggles to keep up in the AI market. It’s a stark reminder that even tech giants can find themselves on shaky ground.
- ByteDance is getting creative, developing a new AI model using Huawei’s Ascend 910B chips. It’s like watching a tech version of “MacGyver” as companies find workarounds to U.S. export restrictions.
Commodities & Crypto Corner
Oil prices are doing their best impression of a rocket ship, fueled by the rising tensions in the Middle East. Brent crude and WTI are trading at $78 and $74.20 respectively, up nearly 10% this week. It’s enough to make any energy trader’s heart race faster than a caffeinated squirrel.
Gold seems to be taking a breather at $2,650, apparently exhausted from its recent climb. Meanwhile, base metals are showing off, benefiting from Beijing’s economic support announcements. It’s like watching a metal gymnastics routine, with aluminum, zinc, and copper all sticking their landings.
Bitcoin, on the other hand, is having a bit of a tantrum. After three weeks of gains, it’s fallen by more than 6% this week, now flirting with the $61,000 mark. It’s a good reminder of an investing fundamental: past performance doesn’t guarantee future results. Or as I like to say, “Just because your lucky socks worked last week doesn’t mean they’ll work this week.”
Calendar
Next week, all eyes will be on the September CPI report. Economists expect the core inflation rate to hold steady at 3.2% year-over-year. It’s like waiting for your annual physical results – you’re hoping for good news, but bracing for any surprises.
We’ll also get to digest the producer price index report and the preliminary University of Michigan consumer survey for October. And let’s not forget the FOMC minutes from the September meeting – it’s like getting a peek at the Fed’s diary.
The earnings season kicks off with heavy hitters like Delta Air Lines, PepsiCo, and JPMorgan Chase stepping up to the plate. It’s like the opening night of a Broadway show – we’re all eager to see how the performance goes.
And of course, we’ll all be keeping a close eye on developments in the Middle East. It’s a stark reminder that in the world of investing, geopolitics can often throw a wrench in the works.
As we navigate these choppy waters, remember: diversification is your life jacket. Don’t put all your eggs in one basket, unless you’re really, really good at carrying baskets. Stay informed, stay diversified, and most importantly, stay curious. The market always has something new to teach us.
