Stock Market Analysis - October 1, 2024

Market Overview

As we start October 2024, the stock market is reflecting a mixed sentiment shaped by recent geopolitical developments and economic data. The ongoing tensions in Eastern Europe and the potential rise in energy prices have created volatility, while US economic indicators have shown signs of resilience. Last week, the S&P 500 finished down by 1.2%, while the tech-heavy NASDAQ slid 1.5%, highlighting concerns over inflation and interest rates.

Key Events Impacting the Market

1. Geopolitical Tensions: Increased military activity in Eastern Europe has raised concerns about supply chain disruptions and energy costs. The situation remains fluid, and investors are closely monitoring developments.
2. Economic Data: The recent non-farm payroll report showed that the US economy added 200,000 jobs in September, a sign of economic stability, but not enough to prompt the Fed to reconsider interest rate hikes. This mixed data has caused uncertainty in market projections.
3. Corporate Earnings: Upcoming earnings reports from major companies in the tech and consumer discretionary sectors will be in focus this week, particularly for insights on spending trends.

Key Events to Watch Next Week

• Federal Reserve Meeting: The Fed’s upcoming policy meeting on October 10 will be pivotal. Investors will be looking for signals regarding interest rate adjustments and inflation targets.
• Inflation Data: The Consumer Price Index (CPI) report set to be released on October 12 could further gauge the Fed’s stance on inflation.

Notable News from Last Week

• Oil Prices Surge: Oil prices climbed 4% last week, driven by supply concerns and rising demand in Asia, impacting sectors reliant on energy.
• Tech Slack: Major tech companies reported disappointing user growth, particularly affecting stocks like Meta and Amazon, which faced increased competition.

Recommendations

Buy:

• SPDR S&P 500 ETF (SPY): A great choice for long-term investors looking to ride the general market trend while diversifying across the S&P 500 indices.
• iShares Russell 2000 ETF (IWM): With small caps showing some resilience, consider this ETF for potential growth as the economy stabilizes.

Sell:

• Meta Platforms (META): Given the recent user growth numbers, it might be prudent to take profits or reduce exposure as the company re-evaluates its strategy.
• Exxon Mobil (XOM): Despite the recent surge, with geopolitical tensions creating volatility in oil prices, it may make sense to exit or trim positions as the market adjusts.

Conclusion

As we step into October, remaining cautious is advisable. Keep a close eye on economic indicators and corporate earnings reports that will shape market direction. Investing in ETFs like SPY and IWM could provide a balanced approach to potential growth, but it’s crucial to stay informed about broader market trends and geopolitical developments.