Investment update
Weekly insight into the marketplace.
October 28 to November 1, 2024
Markets lost ground for a second week
The four major North American stock indexes all gained on Monday as investors looked ahead to a busy week of corporate-earnings reports and important economic indicators. From there though, optimism slowly waned through the week. On Tuesday, the S&P 500 and the Nasdaq rode a rally in tech stocks to a positive close, while Canada’s TSX and the Dow Jones Industrial Average declined. The Canadian market was weighed down by losses in the telecom and energy sectors. All four of the major indexes declined on Wednesday as markets reacted to a barrage of corporate earnings, as well as weaker-than-anticipated U.S. Gross Domestic Product (GDP) data. Despite better-than-expected earnings from Meta and Microsoft on Thursday, the indexes tumbled further, with the Nasdaq leading the way with a 2.8% loss. Thursday’s results also confirmed a monthly loss for all three of the Wall Street benchmarks. Canada’s TSX was positive for October. The major indexes gained on Friday, but not enough to recover the week’s losses.
Five of the "Magnificent 7" reported quarterly revenue
The focus last week was on five of the world’s biggest names in tech that collectively make up part of the high-flying stock group nicknamed the "Magnificent 7." Google’s parent company, Alphabet, reported revenue of US$88.27 billion and year-over-year growth of 15%. The company’s cloud revenue was a highlight, jumping 35% to US$11.35 billion. Meta posted better-than-expected Q3 results with US$40.59 billion in revenue versus the $40.25 billion expected. Microsoft generated US $65.6 billion of revenue against the US$64.5 billion that was forecast by analysts. For the same period last year, Microsoft had revenue of US$56.5 billion. Apple beat revenue estimates (US94.9 billion vs. US$94.36 billion) with iPhone sales that totalled US$46.22 billion from July to September. Amazon easily surpassed its forecast with revenue of US$158.9 billion (versus US$157.28 billion forecast) with the Seattle-based company reporting its core online retail business earned US$61.41 billion.
GDP data provided an economic health update
According to data released by the U.S. Commerce Department on Wednesday, America's GDP grew at a 2.8% annual rate in Q3, driven by strong consumer spending. This was slightly weaker-than-expected and a modest slowdown from the 3% growth rate recorded for the prior quarter but shows ongoing resilience in the world's largest economy following years of elevated interest rates. On Thursday, a separate Commerce Department report showed that the Personal Consumption Expenditures price index – the U.S. central bank's preferred measure of inflation – rose at a 2.1% annual pace in September, cooling from 2.3% in August. Canadian data released on Thursday pointed to a lagging economy. An advance estimate for September by Statistics Canada forecasts GDP growth of 0.3% month over month. Taken along with flat growth in August, and a downward revision for July to 0.1%, the numbers point to tepid annualized growth of 1% in the third quarter, below the Bank of Canada's 1.5% projection.
The stock and bond market*
| Index | Close | Week | YTD |
|---|---|---|---|
| S&P/TSX Composite | 24,255.16 | -0.85% | 15.73% |
| Dow Jones Industrial Average | 42,052.19 | -0.15% | 11.58% |
| S&P 500 Index | 5,728.80 | -1.37% | 20.10% |
| NASDAQ Composite | 18,239.92 | -1.50% | 21.51% |
| 10-year Canadian Bond Yield | 3.22% | -0.04% | 0.12% |
| 10-year U.S. Treasury Yield | 4.37% | 0.12% | 0.49% |
| WTI Crude Oil (US$/barrel) | $69.49 | -3.19% | -3.01% |
| Canadian Dollar | US$0.7169 | -0.40% | -5.06% |
| Bank of Canada Prime Rate 5.95% | |||
*Weekly performance ending November 1, 2024. Source: Bloomberg.
U.S. Federal Reserve interest-rate announcement (November 7): The Fed announced a 50-basis-point interest-rate cut in September to kick-start a cutting cycle after a prolonged period of elevated rates. Economists and investors are expecting a 25-basis-point reduction to follow on Thursday.
Circle these dates
November 28: U.S. markets closed for Thanksgiving Day
December 11: Bank of Canada interest-rate announcement
The commentary in this report is based on current market conditions and market media sources available to the public and may change without prior warning at any time. The forecasts provided herein are not guarantees of future performance and include risks, uncertainty and assumptions. While Co-operators Life Insurance Company (“Co-operators”) believes these assumptions are reasonable, there is no guarantee they will be confirmed. This report is not a guarantee of future investment performance, nor should undue reliance be placed on this report. This report is provided as a general source of information for a specific point in time and should not be considered solicitation to buy or sell any investment. Nothing contained in this report constitutes investment, legal, tax or other advice. The content in this report should not be relied upon in making an investment or other decision, and individuals should obtain relevant and specific professional advice and read the terms and conditions contained in the relevant offering documents carefully before any investment decision is made. Co-operators is not responsible for any loss or damage as a result of reliance on the information contained in this report. Co-operators makes no representations or warranties as to the information contained herein and does not guarantee its accuracy, timeliness, completeness or usefulness. Co-operators is committed to protecting the privacy, confidentiality, accuracy and security of the personal information it collects, uses, retains and discloses in the course of conducting business. Please visit cooperators.ca/privacy for more information. Co-operators® is a registered trademark of Co-operators Group Limited and is used with permission. Investing in your future. Together.TM is a trademark of Co-operators Group Limited. If you are a client who has received this, and you have questions or want to discuss your investments, please contact your Financial Advisor.
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