Stocks Fell Weighted by Elevated Inflation Data

Weekly Wrap Content for the week of Oct 14:

1. Week 41 major indexes performance;

2. Week 41 US sector indexes performance;

3. Major indexes weekly charts of support and resistance levels;

U.S

For the week ended Oct 14, the U.S stocks were mostly lower, as third-quarter earnings reporting season began in earnest and investors weighed inflation data and their implications for Fed policy. By the end of the week, the S&P 500 Index had surrendered nearly half of its gains since its March 2020 bottom. Refer to major indexes’ weekly performance tables below.

This table below shows the performance of the stock market at various time periods after a bear market ends. The last seven bear markets have seen an average decline of 40%. Importantly, stay invested in order to reach your destination. Doing so enable you to participate in the rebounds, with historically averaging nearly a 50% gain in the first year alone.

Key highlights for the week and outlook:          

1.    Sep core consumer price index (CPI) inflation at four-decade high. Thursday’s CPI inflation data showed core consumer prices rose 6.6% on a yoy basis in September. This was more than expected, above the previous March peak, and the fastest pace in four decades. Stocks fell sharply on the news but quickly rebounded. 

2.    Q3 earnings kicked into gear with the release of mixed results from some banking sector heavyweights, as Dow member JPMorgan Chase and Citigroup both bested estimates, but Morgan Stanley and Wells Fargo fell short. Meanwhile, shares of Dow component UnitedHealth increased after beating estimates and upping its guidance.

SPX sectors in play

Three out of 11 sectors in the S&P 500 ended green this week. The typically defensive health care(XLV) and consumer staples(XLP) sectors outperformed, while consumer discretionary(XLY) and communication services(XLC) shares lagged, dragged lower by heavily weighted Amazon.com, Tesla, and Meta Platforms (parent of Facebook). Likewise, slower-growing value stocks handily outperformed their growth counterparts. Refer to below SPX sector indexes weekly performance table.  

Technically DJI index closed edged up for 2^nd week, but both Nasdaq and SPX indexes closed lower. SPX had surrendered nearly 50% of its gains since its March 2020 bottom, while the weaker technology dominated Nasdaq Composite Index closed at 61.8% Fibonacci retracement level, given back more than 60% of its gains in the same period. The DJI index gave back around 40% so far in the same period.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China’s stock markets rose after the weeklong National Day Holiday, lifted by supportive central bank comments and anticipation of policy signals during the Communist Party Congress, a twice-a-decade gathering of the country’s political elite that began on Sunday.  The broad, capitalization-weighted Shanghai Composite Index (SSE weekly chart)added 1.57%.

The People’s Bank of China (PBOC) will focus on supporting infrastructure construction and enabling quicker delivery of home projects, according to PBOC Governor Yi Gang. Last week, the state-run newspaper People’s Daily stated in a commentary that China must stick to zero-COVID because the policy is key to stabilizing the economy and protecting lives. The commentary dampened hopes that Beijing would relax the country’s zero-tolerance approach to the coronavirus anytime soon, despite its impact on China’s economy.

In Hong Kong, the Hang Seng index (.HSI weekly chart) recorded six-day losing streak and closed the week at new low in 11 years.

Singapore

STI index (STI weekly chart) fell 1.55% this week, closed new low since Mar 2021. Technically, STI index broken down key support around 3090 which we monitored closely for last few weeks. It’s expected to see the index to find support in between 3040-3000 which is an important psychological level.

 

Source: Contents/Data including information from various public market reports