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Weekly Recap | October 24, 2022

Weekly Recap | October 24, 2022

October 25, 2022
Weekly Recap

October 17-21, 2022 Recap

Investor Optimism Grows

Stocks Rebound
Corporate earnings and comments from Federal Reserve officials were the focus last week. Thus far, just over 20% of the S&P 500 companies have released earnings for the 3rd quarter. Of these companies around 72% have beat expectations. Markets rallied as investors are starting to speculate that the Fed may only raise the Fed funds rate by 0.50% in December rather than 0.75%. A rate hike of 0.75% on November 2 is still largely expected.

For the Week…
The S&P 500 rose 4.75% after falling 1.53% the week prior. The Dow Jones Industrial Average rose 4.93% and the tech-heavy Nasdaq Composite jumped 5.22%.

Mortgage Activity Slumps
The mortgage applications activity index published by The Mortgage Bankers Association’s (MBA) fell 4.5% the week ending October 14. Applications are in their fourth month of declines, reaching the lowest level since 1997. New purchase applications fell 3.7% and refinance activity tumbled 6.8% as the average 30-year fixed rate home loan climbed to 6.94% from 6.81% the week prior.

Gains for All Sectors
All 11 major S&P 500 sectors ended positive last week, with Energy (+8.08%), Technology (+6.49%) and Materials (+6.15%) up the most. The three sectors that posted the least gains were Utilities (+1.95%), Consumer Staples (+2.28%) and Healthcare (+2.30%).

Treasury Yields Continue to Climb
U.S. Treasury yields for 10-year bonds rose another 0.21% after closing above 4% the week prior for the first time in 14 years. The 10-year yield closed Friday at 4.21%. Yields on 2-year Treasuries yields are influenced more by the Fed Funds rate and jumped to 4.62% on Thursday, but closed the week relatively unchanged at 4.49%, as Fed rate hike expectations fell on Friday.

The Latest from @CeteraIM

Labor Market Shows Resilience

Air Travel Near 2019 Levels

Growth and Value Correlations Converge

Economic Calendar

Monday, October 24
Chicago Fed National Activity, S&P Global Mfg/Services Flash PMIs.

Tuesday, October 25
S&P Case-Shiller Home Prices, Consumer Confidence.

Wednesday, October 26
Advance Goods-only Trade Balance, New Home Sales. 

Thursday, October 27
Initial 3Q GDP estimate, Jobless Claims, Durable Goods Orders.

Friday, October 28
Employment Costs, PCE Prices, Personal Incomes/Spending, Pending Home Sales, Consumer Sentiment.

New housing starts fell 8.1% last month, continuing their trend lower as demand wanes from rising mortgage rates. However, total units under construction rose to a new record high. A lot of new inventory is coming. 52% of units under construction are multi-family, which will help slow rental price growth.

This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.

About Cetera® Investment Management
Cetera Investment Management LLC is an SEC registered investment adviser owned by Cetera Financial Group®. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.

About Cetera Financial Group
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The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.

The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.

The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index

The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.

The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.

The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.

The Bloomberg US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.

The Bloomberg US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.

The Bloomberg US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.

The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.

The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.

The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.

The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.

The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.

The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.