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Weekly Market Update for October 8, 2021

by Jared Plotz

After ending the month of September in the red, major market indices squeaked out a positive week to kick off October. The S&P 500 was up 0.8%, while the DOW advanced 1.2% and the NASDAQ trailed at +0.1%. Trading in technology stocks remained mixed, while energy stocks continued their move higher as WTI oil prices crossed over $80 per barrel. Financials also had a good week, benefiting from the rise in 10-yr Treasury Bonds from 1.46% to 1.60%.

There were several notable items in Friday’s employment report. The headline nonfarm payroll metric showed a gain of 194,000 jobs in September, which was below expectations of around 500,000. However, July’s strong job gains were revised even higher, as were August gains. Furthermore, the unemployment rate ticked down more than expected, falling to 4.8%, as the labor force participation rate edged lower. Average hourly earnings rose 0.6% month over month, continuing to show signs of upward wage pressure. On the whole, the report didn’t do too much to move the needle on the Fed’s tapering decisions.

On the legislative side this week, the Senate helped kick the debt-limit can down the road to December, ending a weeks-long standoff. The House is expected to pass the short-term extension as well. This saves the economy from potential fiscal crisis and indices bounced higher Thursday on the early news.

A few market risks hang in the balance though as we push further into October. For one, talk of margin issues stemming from supply chain and labor market disruptions may be front and center during earnings reporting season. Uncertainty around monetary tapering (timing/scope) likely builds as we approach the November FOMC meeting.  And despite the resolution of the immediate debt ceiling predicament, Washington dysfunction surrounding major infrastructure and reconciliation proposals continues.

Corporate third-quarter earnings begin next week, with JPMorgan getting the ball rolling on Wednesday. Most of the other big banks will follow them over the ensuing two days, and United Healthcare will report Thursday as well. Additional economic data points will also come in, including the September Producer Price Index, retail sales, and trade/business inventories.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

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