Last week, we learned that economic growth slowed in the third quarter as a new wave of COVID-19 surged across the United States, reported The Bureau of Economic Analysis. Gross Domestic Product (GDP), which is the value of all goods and services produced in the United States, increased by 2 percent annualized in the third quarter.
Consumer spending dropped sharply during the period. The change may reflect the limited availability of goods due to supply-chain issues, a reluctance to pay higher prices, or a drop in disposable personal income. Jeff Cox of CNBC reported:
“Spending for goods tumbled 9.2%, spurred by a 26.2% plunge in expenditures on longer-lasting goods like appliances and autos, while services spending increased 7.9%, a reduction from the 11.5% pace in [the second quarter]. The downshift came amid a 0.7% decline in disposable personal income, which fell 25.7% in [the second quarter] amid the end of government stimulus payments. The personal saving rate declined to 8.9% from 10.5%.”
Despite slower economic growth and lower consumer spending, many companies remained highly profitable during the third quarter. At the end of last week, John Butters of FactSet reported:
“At this point in time, more S&P 500 companies are beating EPS [earnings-per-share, which is a measure company profits] estimates for the third quarter than average, and beating EPS estimates by a wider margin than average…The index is now reporting the third highest (year-over-year) growth in earnings since [second quarter] 2010. Analysts also expect earnings growth of more than 20% for the fourth quarter and earnings growth of more than 40% for the full year.”
It appears that public companies remain adaptable and resilient despite the ongoing challenges created by the pandemic.
Last week, the three major U.S. stock indices finished the week at record highs, according to Ben Levisohn of Barron’s.The Treasury yield curve flattened as yields on longer-term U.S. Treasuries also moved lower.
Data as of 10/29/21
|Standard & Poor's 500 Index||1.3%||22.6%||39.1%||20.4%||16.7%||13.9%|
|Dow Jones Global ex-U.S. Index||-0.8||6.8||26.4||10.6||7.5||4.5|
|10-year Treasury Note (yield only)||1.6||N/A||0.8||3.1||1.8||2.2|
|Gold (per ounce)||-2.2||-6.3||-5.4||12.9||6.8||0.3|
|Bloomberg Commodity Index||-0.4||32.4||44.3||7.0||4.0||-3.6|
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; Federal Reserve Bank of St. Louis; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
November is chock full of holidays. Thanksgiving, Veteran’s Day, Dia De Los Muertos, Diwali, Hanukkah, and Giving Tuesday are widely celebrated, and there are a significant number of less widely celebrated holidays on the calendar, too.
Here are two tree things you can talk about on National Absurdity Day: (1) Tulips were once more valuable than gold; and (2) There are almost 100 holidays in November.
“The fact that an opinion has been widely held is no evidence whatever that it is not utterly absurd.”
—Bertrand Russell, mathematician
https://www.barrons.com/articles/stock-market-sell-or-buy-now-51635552720?refsec=the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/11-01-21_Barrons_There%20Are%20Hundreds%20of%20Reasons%20to%20Sell%20Dont_4.pdf)