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Weekly Market Recap: October 30, 2023

Weekly Market Recap: October 30, 2023

Posted October 30, 2023 at 10:15 am
J.P. Morgan Asset Management

The week in review

  • Mfg./Services PMI: 50.0/50.9
  • Initial claims edged higher to 210K

The week ahead

  • Nonfarm payrolls
  • FOMC meeting

Thought of the Week

Entering 2023, many analysts had penciled in a mild U.S. recession by mid-year. However, strong incoming economic data kept delaying the start date. Growth remained steady in the first half of the year, despite a hiccup in 1Q23 due to the regional banking crisis, and, more recently, a combination of positive impulses boosted 3Q23 GDP growth to a real annualized rate of 4.9% – the fastest pace in two years.

Zooming in on specifics, a notable summer splurge, particularly by affluent households, propelled private consumption to 4% growth for the quarter. This surge contributed over half of the accelerationin real GDP growth. Inventory accumulation, typically a volatile component, was the second largest contributor, as automakers stockpiled ahead of anticipated strikes. Housing shortages drove residential investment, while national defense spending boosted the government’s contribution to GDP, each adding 0.2%-pts. On the flip side, non-residential investment was a major drag on growth – potentially indicating a cautious turn in business sentiment.

While the headline GDP figure seems impressive at first sight, it likely overstates the strength of the economy. A recent backup in long-term yields has weighed on stocks, and poses a risk to the spending surge by wealthier households through negative wealth effects. The positive impulses from inventory build-ups and government spending will also likely be transient; and while the Fed may acknowledge progress on core-PCE inflation when holding rates steady this week, it will likely keep the door open for a December rate hike. As a result, investors should brace for a slowing economy by maintaining well-balanced portfolios of financial assets and may want to consider adding alternatives that can provide durable streams of income, additional diversification, and more robust rates of return.

Originally Posted October 30, 2023 – Weekly Market Recap

Past performance does not guarantee future results.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be appropriate for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

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Disclosure: J.P. Morgan Asset Management

Past performance does not guarantee future results.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

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