Stocks neared or hit record highs last week, even as the 10-year Treasury yield reached its highest level since 2002. Behind that move, stubborn inflation is keeping pressure on the Federal Reserve to hike rates again, while energy costs continue to squeeze households.

 

Here’s how the major benchmarks finished the week, followed by a closer look at the forces moving markets.

 

 

Stock Index Performance

• The S&P 500 advanced 1.15%.
• The Nasdaq 100 edged up 0.24%.
• The Dow Jones Industrial Average added 0.93%.

 

 

Currents at Work

Bond yields hit a multidecade high. The 10-year Treasury yield, a benchmark for mortgages and many other loans, reached that peak midweek before easing slightly. Inflation and government-debt concerns helped drive the climb. For investors, new bonds now pay more, but existing bonds can lose value if rates keep rising. Higher yields also make stocks look pricier by comparison.

 

The economy grows, but slows. The service sector, which includes everything from restaurants to healthcare, kept expanding in September, though at a slower pace than it had been. Businesses said costs are rising quickly, driven by fuel, tariffs, and supply snags. Hiring has slowed sharply, but layoffs remain rare, a pattern economists call “low-hire, low-fire.”

 

Energy costs continue to pinch households. Oil prices remain high amid uncertainty over the war with Iran, keeping gasoline above $4 a gallon on average and straining family budgets. Consumer sentiment soured in early October amid frustration over living costs, especially among lower-income households. So far, though, this gloomier mood hasn’t translated into a sharp drop in spending.

 

 

 

The Week Ahead

A busy calendar will test the market’s optimism. Major banks begin reporting earnings Tuesday, offering an early read on how households and businesses are coping with higher borrowing costs. Wednesday’s consumer price index (CPI) report will indicate whether high energy costs are spreading into everyday prices, and Thursday’s retail sales figures will reveal whether shoppers are still spending. This week’s inflation and spending data could help shape the Fed’s next move. Additionally, two key AI suppliers, ASML and Taiwan Semiconductor, report this week, giving a fresh check on whether demand can sustain the tech rally.

 

 

 

 

This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.

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