U.S. Stocks End New Highs as Inflation Lower than Expected

Join SgTraderClub Facebook group HERE for daily stocks and market updates, and more.

Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

6.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week of Oct 24, major U.S. stock indexes advanced, shaking off volatile headlines related to U.S.-China trade relations and a pop in oil prices after the U.S. announced sanctions against Russia’s two largest oil companies. Major indexes the S&P 500(SPX), Nasdaq Composite Index(COMP) and Dow Jones Industrial Averages(DJI) all ended the week at new record highs. Refer to below major indexes weekly performance.

Key highlights for the week and next:

1.    How long will this bull market last? Since the October 2022 low, the S&P 500 has gained 90%, or 98% including dividends. Looking back over the past 80 years, the 12 prior bull markets (excluding the current one) have averaged a gain of about 200% and lasted five years. So, this bull market is neither a toddler nor a senior citizen — it’s somewhere in the middle. 

2.    Fed rate cut. Delayed September CPI report due to government shutdown, was finally released on Friday( Oct 24) before market open, the inflation reading came in softer than expected, with headline CPI rising 0.3% from prior month beat expectation of 0.4%. The core index rose 0.2% vs. an expected 0.3%, the slowest pace in three months. Cooler inflation clears the path for an October Fed rate cut, with more likely to follow. 

3.    Q3 Earnings reports. U.S. corporate profits continue to grow at a healthy pace, despite trade disruptions and a cooling labor market. Over the next two weeks, nearly 60% of S&P 500 companies will report results, including the bulk of the Magnificent 7 (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla). This group is expected to post 15% year-over-year earnings growth, compared with 6.7% for the remaining 493 companies and 8.5% for the index overall. 

SPX sectors in play

Nine out of 11 SPX sectors recorded weekly gains. Information technology(XLK) and energy(XLE) led the way; utilities(XLU) and consumer staples(XLP) lost ground. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three major indexes had bullish breakout from previous weekly inside-candlestick, just as per our bullish prediction. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland China stock markets rose amid strength in technology-focused shares despite economic data highlighting weak domestic demand. The Shanghai Composite Index(SSE) rose 2.88% and the blue-chip CSI 300 added 3.24%. In Hong Kong, the benchmark Hang Seng Index rebounded 3.62%.

Key highlights for the week and outlook for China/HK:

China’s economy grew 4.8% in the third quarter from a year ago, putting it on a “solid foundation” for meeting the official growth goal of around 5% this year, the country’s statistics bureau said Monday. Other data, however, highlighted several pockets of weakness in China’s economy. Retail sales grew 3.0% year over year (YoY) in September, the slowest pace since November, while fixed asset investment unexpectedly fell 0.5% YoY in the first nine months of the year. Industrial output rose a better-than-expected 6.5% YoY in September, driven by the booming export sector.

Encouraging people to spend more and save less appears to be a matter of growing urgency for Beijing amid a rise in global trade protectionism. But a yearslong housing market slump and persistent deflation have sapped consumer demand.

On the policy front, China said it aims to “greatly increase” the country’s capacity for self-reliance and strength in science and technology in the next five years. It also vowed to maintain manufacturing’s share of the economy at a “reasonable” level as it builds a modern industrial system, Bloomberg reported, citing state media. The statements were contained in a communique released last Thursday at the end of China’s fourth plenum, a four-day conclave of top Communist Party officials to review and approve the main themes of the 15th Five-Year Plan, a blueprint for China’s economic and social development goals from 2026 to 2030.

Refer to below Hang Seng Index stocks’ weekly performance table.

Click below for SSE and .HSI weekly chart.

SSE weekly chart

.HSI weekly chart

 

Singapore

The Straits Times Index (STI) added 2.15% to close at 4422.21 this week. Weekly uptrend is well intact.

The DBS Singapore 2024 report released on Oct 22, it said Singapore’s economy could more than double by 2040, with Singapore dollar potentially trading 1-for-1 against the US dollar and the STI index climbing t0 10,000 points over the 15-year period.

Looking ahead, DBS said that passive inflows are likely to continue favouring large-cap counters listed on the Singapore Exchange, as overseas investors seek stable markets and safe-haven exposure.

Interest in small and mid-cap stocks is also expected to grow with support from the Government’s Equity Market Development Programme. Stocks in the income and staples categories across all market capitalisations could benefit as well, as lower interest rates encourage investors to shift money out of deposits and money-market instruments and back into equities. Refer to below STI index stocks’ weekly performance.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports. Please comment to claim copyright ownership of any material, and I will remove it if necessary.