S&P 500 Reaches New Height as Bank Profits Propel Market Upward

The S&P 500 (Index: SPX) reached a new height to mark the end of the second week of October 2024. The index closed at a new all time record high of 5,815.03 on Friday, 11 October 2024, a 1.1% increase over where it closed in the previous week.

Most of that week-over-week gain came on Friday as both JP Morgan Chase (NYSE: JPM) and Bank of New York (NYSE: BNY), as both banks beat profit estimates, which was unexpected news.

Aside from that surprise, the rest of the week was characterized by a lot of chatter by Federal Reserve officials, who aimed to set expectations for smaller rate cuts in the remaining months of 2024.

How the rest of earnings season plays out remains to be seen, but this week, it’s good earnings news that has Wall Street bulls considering the prospect of higher highs in the quarter ahead. Which coincidentally, is what the latest update of the alternative futures chart projects lies ahead during this quarter.

For now, the trajectory of the S&P 500 lies within the redzone forecast range we added several weeks ago, which we expect to continue until it runs out in three weeks.

There was more information for investors to absorb during the week that was, here’s our summary of its market moving headlines.

Monday, 7 October 2024

• Signs and portents for the U.S. economy:

• Oil pares gains after strongest weekly rise in over a year

Fed minions say more rate cuts ahead are “appropriate”:

• Fed’s Williams says appropriate again to cut rates ‘over time’, FT reports
• Fed’s Musalem argues for more rate cuts, says data to drive easings

Bigger stimulus getting some traction in China:

• China home sales rise after stimulus measures, state media says

BOK minions gearing up for a rate cut:

• Bank of Korea to kick off easing cycle with 25 bps cut on October 11: Reuters poll

BOJ minions rate hikes expected to cause little damage Japanese economy:

• Fall in Japan’s real wages, spending likely just minor bump for further BOJ hikes

ECB minions getting excited to cut Eurozone interest rates again:

• ECB will probably cut rates in Oct on risk of too low inflation: Villeroy
• Bundesbank’s Nagel says he is open to another ECB rate cut

Nasdaq, S&P, and Dow concluded lower as geopolitical tensions rise and CPI data lurks

• Wall Street indexes slip with interest rates, Middle East in focus
• How a rates rethink after strong US jobs data could shake up markets

Tuesday, 8 October 2024

• Signs and portents for the U.S. economy:

• Crude prices slide over 4% on possible Hezbollah-Israel ceasefire

• EIA slashes US, global oil demand forecasts for 2025

US bank profits to shrink on interest income, focus shifts to Fed cuts

US candy companies favor gummies, licorice over pricey Halloween chocolates

Fed minions see cooling U.S. job market, more rate cuts ahead:

• US jobs market cooling but still resilient, Fed’s Kugler says

• Fed’s Kugler makes case for more rate cuts if inflation keeps easing

Fed’s Collins expects more rate cuts amid confidence inflation is easing

Fed’s Bostic says labor market slowing but not slow, jobs gains ‘robust’

Bigger trouble developing in China after expected stimulus isn’t delivered:

• China’s stocks rally fizzles as stimulus offer disappoints

• Hong Kong Crashes As China’s Stimulus Frenzy Ends With A Bang

ECB minions expected to deliver two Eurozone rate cuts in remainder of 2024:

• ECB to cut rates by 25bps in both Oct and Dec as euro zone economy wobbles: Reuters poll

S&P, Nasdaq end up 1%, Dow up as oil slides on China stimulus letdown, Middle East unease

• US-listed shares of Chinese firms slide as stimulus optimism ebbs

Wednesday, 9 October 2024

• Signs and portents for the U.S. economy:

• Oil slips as strong supply counters Middle East and hurricane risk
• US 30-year mortgage rate jumps to 6.36%, biggest weekly gain in 15 months

Fed minions say their rate cuts are about propping up job market, expect to need to deliver more:

• A ‘substantial majority’ of Fed favored large cut in Sept, minutes show

• FOMC Minutes Show Fed Considerably More Divided Over Size Of Rate Cut

Fed Vice Chair Jefferson: rate cut aimed at keeping US job market strong

• Fed Vice Chair Jefferson: Sept rate cut was ‘timely’

Fed’s Collins expects more rate cuts amid confidence inflation is easing

Fed’s Daly sees one or two more interest rate cuts this year

Fed’s Logan calls for ‘gradual’ rate cuts, says ‘should not rush’

Fed’s Collins expects more rate cuts amid confidence inflation is easing

Not big enough stimulus developing in China:

• China’s runaway rally stutters; commodities and global shares subdued
• China September bank lending set to rise on policy support

ECB minions getting excited to Eurozone interest rates again, get data to contradict their desire:

• ECB policymakers press case for October rate cut
• German exports rise in August, defying expectations of decline

S&P ends at record high, Dow up 1% after Fed minutes show majority backed 50bp rate cut

• Wider US deficits, inflationary trade policies threaten bond outlook, says PIMCO

Thursday, 10 October 2024

• Signs and portents for the U.S. economy:

• September CPI rises more than expected, indicating inflation risks remain

• 2 Warm Sept CPI inflation chills outlook for dovish Fed
• Core Producer Price Inflation Hotter Than Expected; Food Costs Surge

Oil prices jump 4% on US storm and Israel-Iran fears

Domino’s Pizza posts smaller-than-expected rise in comparable sales as demand stutters

US weekly jobless claims surge amid Hurricane Helene distortions

Fed minions say never mind inflation running hot, they’re on course for more rate cuts:

• Fed on track for gradual rate cuts ahead, officials signal

• Fed’s Williams reckons more rate cuts lie ahead, amid solid economy
• Fed’s Goolsbee sees gradual policy rate cuts over next 12-18 months

Bigger trouble developing in China:

• China’s exports likely slowed further in September as global demand cools

BOJ minions claim they’ll hike rates when and if they become more confident:

• BOJ may not be as dovish as Ueda’s cautious rhetoric suggests
• BOJ will hike rates if it has more confidence in forecasts, says deputy governor Himino

BOK kicks off series of anticipated rate cuts:

• South Korea’s central bank makes first rate cut, flags room for more

S&P, Dow, Nasdaq fluctuate as CPI warms, jobless claims come in hotter than expected

Friday, 11 October 2024

• Signs and portents for the U.S. economy:

• Oil settles down on Florida fuel demand worries, Mideast risk drives weekly gains

Fed minions expected to deliver two quarter point rate cuts in months ahead:

• Traders keep bets on 25 basis point Fed rate cuts in November, December

S&P, Dow close at record highs as market enters year two of bull run; Nasdaq rises

• S&P 500, Dow hit records, boosted by bank earnings surprise

• JPMorgan profit beats estimates on investment-banking strength, shares jump
• BNY beats Q3 profit estimates as assets under custody and administration top $50 trillion

The CME Group’s FedWatch Tool continues to project a quarter-point rate cut at the Fed’s upcoming 7 November 2024 meeting. Afterward, the FedWatch tool anticipates that the Fed will continue a series of quarter point rate cuts at six-to-twelve-week intervals well into 2025.

The Atlanta Fed’s GDPNow tool‘s projection of the real GDP growth rate for the current quarter of 2024-Q3 increased to +3.3% from the previous week’s forecast of +2.5% growth.

Image credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a Wall Street bull standing on a small peak looking out at an even higher peak in the distance”