Weekly Market Mornings (October 20) Gold Price Hit Record, Silver Soared, Crude Fell

Last Week’s Reports

Economic Reports

In September, U.S. retail sales grew by 0.4% month-over-month, driven by strong performances in nonstore retailers (up 1.4%) and health and personal care stores (up 0.7%). This growth suggests improved consumer confidence and spending, 

The U.S. saw initial jobless claims drop to 241K for the week ending October 12, down from 260K the previous week, while continuing jobless claims rose to 1.867 million for the week ending October 5, remaining below forecasts. These figures indicate a strengthening labor market, which can enhance consumer confidence and spending, positively impacting the economy. 

The Philadelphia Fed Manufacturing Index surged to 10.3 in October from 1.7 in September, exceeding the expectation and indicating strong growth in the manufacturing sector. This can boost market confidence.

However, preliminary data for U.S. building permits in September showed a 2.9% decline, with a seasonally adjusted annual rate of 1.428 million, down from the forecasted 1.460 million. Building permits are a key indicator of future construction activity and housing market demand. A decrease in building permits can signal potential challenges for the real estate market and indicate a cooling housing market due to high interest rates. Keep an eye on the real estate sector for further developments.

Earning Reports

UnitedHealth

UnitedHealth (UNH) reported a revenue of $100.8 billion, which is a 9.1% increase year-over-year. Also, the reported revenue surpassed estimates.

The company posted an Earnings Per Share (EPS) of $6.51, which includes impacts from a cyberattack. Adjusted EPS, excluding these impacts, was $7.15, beating expectations.

There was some negative news for UnitedHealth Group in their Q3 2024 earnings report. The company faced a cyberattack on its subsidiary, Change Healthcare, which impacted their earnings. The cyberattack resulted in business disruption impacts of approximately $0.75 per share. Despite these challenges, UnitedHealth Group still managed to report strong overall growth.

The company added more than 2.4 million people through its domestic commercial business offerings. Also, UnitedHealth Group invested more than $11 billion in strategic opportunities.

The Stock price dropped 7% due to a cyberattack which affected the company’s earnings.

Johnson & Johnson

Johnson & Johnson (JNJ) report showed a 5.2% increase in sales to $22.5 billion, with 6.3% operational growth and 5.4% adjusted operational growth. Earnings per share (EPS) dropped 34.3% to $1.11 due to a one-time charge and acquired IPR&D, while adjusted EPS fell 9.0% to $2.42.

Johnson & Johnson increased its full-year 2024 operational sales guidance and updated its adjusted operational EPS guidance to reflect improved performance and the acquisition of V-Wave.

Goldman Sachs

Goldman Sachs (GS) reported a 7% year-over-year increase in total revenue, reaching $12.70 billion for Q3 2024. This growth was driven by strong performance in their Global Banking & Markets segment. 

Also, equities trading saw an 18% revenue increase to $3.5 billion, significantly higher than estimates. Investment banking revenue jumped 20% to $1.87 billion, boosted by strength in debt and equity underwriting. 

However, the company reported a rise in provisions for credit losses to $397 million, prompting a cautious outlook. Goldman Sachs’ stock edged higher in early trading following the earnings report, reflecting investor confidence in the results.

Bank of America

Bank of America (BAC) reported a 12% year-over-year decline in net income to $6.9 billion or 81 cents a share for Q3 2024. This loss is mainly due to higher provisions for loan losses and increased expenses. 

Despite this, the bank achieved a 1% year-over-year revenue growth to $25.49 billion, driven by strong trading and banking fees. Investment banking fees rose significantly by 18% year-over-year, while net interest income fell slightly by 2.9% to $14.1 billion, just below estimates. 

Taiwan Semiconductors

TSMC (TSM) reported outstanding fiscal Q3 2024 results, significantly exceeding forecasts. The company achieved consolidated revenue of $23.50 billion, a 36.0% year-over-year increase. 

Also, net income surged by 54.2% to $10.05 billion, with diluted earnings per share (EPS) of $0.96. These results surpassed market expectations, which had forecasted revenue between $22.4 billion and $23.2 billion and profit increases around 42%. 

During the earnings call, the CFO highlighted the company’s growth and the strong demand for its industry-leading technologies. 

TSMC’s impressive Q3 results had a significant positive impact on the market, with the company’s stock surging around 13% after earnings. TSMC’s strong performance and optimistic outlook, particularly for AI-related demand, have boosted investor confidence, leading to a broad rally in the semiconductor sector.

Netflix

Netflix’s (NFLX) Q3 2024 earnings report highlighted strong growth, with revenue increasing by 15% year-over-year to $9.825 billion. The company added 5.07 million new paid subscribers, bringing the total to 282.72 million. EPS rose to $5.40, up 45%, and operating income increased by 52% to $2.9 billion. 

Netflix’s stock surged 11% after earnings Key growth areas included a 19% revenue increase in the APAC region and new seasons of popular shows in the pipeline.

American Express

American Express’s (AXP) Q3 2024 earnings report showed strong growth, although revenue missed expectations. Revenue increased by 8% year-over-year to $16.6 billion, but earnings per share (EPS) beat forecasts at $3.49, up 6%. 

Also, net income rose 2% to $2.51 billion. Card member spending grew 6% to $387.3 billion. The company raised its full-year EPS guidance to $13.75 – $14.05, up from $13.30 – $13.80. 

Despite positive indicators, AXP shares dropped 4% after earnings due to the revenue miss,

Indices

Indices’ Weekly Performance:

The US equity indexes had a positive week overall. S&P 500 index reached a fresh record high, marking its sixth consecutive week of gains as Q3 earnings surpassed expectations. The Dow Jones Industrial Average up 0.96% last week. The Nasdaq rose 0.26% slightly higher.

The strong earnings from companies like Netflix and Taiwan Semiconductor Manufacturing helped to boost the market. On the flip side, ASML’s lackluster guidance did have some negative impact.

The SPX chart shows the resistance zone around 5880, and the support zone between 5640 and 5670. The RSI indicator suggests a potential weakening of the uptrend. If the price breaks down the purple line around 5840, we anticipate it to drop further.

If the price increases and breaks above the static resistance, it will signal a continuation of the bullish trend. We should then watch how the price behaves around the all-time high. If it can stay above 5880, it presents a buying opportunity. Place a stop loss just below 5877, with a target price at the Fibonacci level around 5935.

Stocks

Stock Market Sector’s Weekly Performance:

Source: Finviz

The Utilities sector had the most significant growth last week, jumping 3.35%. This strong performance reflects robust demand for utility services, potentially driven by seasonal factors or increased consumption.

Real Estate also saw impressive gains, rising 2.76%. Favorable market conditions, such as low-interest rates.

The Financial sector grew by 2.34%. Strong earnings reports from financial institutions and favorable economic indicators boosted investor confidence, driving this positive performance.

In contrast, the Energy sector fell by 2.5%. This decline could be due to factors like falling oil prices, reduced demand for energy.

Stock Market Weekly Performance:

Source: Finviz

Commodity

Weekly Performance of Gold, Silver, WTI and Brent Oil:

Source: Finviz

Gold prices have surged to a new all-time high, closing at $2,721 per ounce, driven by a mix of factors. Easing central bank policies, such as rate cuts by the European Central Bank and expected cuts by the Federal Reserve, have lowered the opportunity cost of holding gold. Additionally, an uncertain U.S. election outlook and escalating Middle East tensions have increased demand for the precious metal as a safe-haven asset. These combined elements have fueled the rally in gold prices.

Silver has indeed been following gold’s upward trajectory. With gold hitting new highs, silver has also seen significant gains, recently reaching $33.032 per ounce. This trend is driven by similar factors affecting gold, such as economic uncertainties, easing central bank policies, and geopolitical tensions.

Crude oil prices are set for their steepest weekly decline in over a month, with WTI crude falling below $70 per barrel. Concerns over demand outlook and a potential surplus have driven this decline, exacerbated by lowered demand forecasts from the IEA and OPEC cuts in projections.

Forex

Weekly Performance of Major Foreign Exchange Pairs:

The EURUSD extended its sharp drop to a three-month low following the European Central Bank’s decision to lower interest rates. The ECB lowered its three key interest rates by 25 basis points in October. The new rates are: 

Deposit Facility Rate at 3.25%, Main Refinancing Rate at 3.40%, and Marginal Lending Rate at 3.65%. This move follows rate cuts in September and June, aimed at managing inflation, which fell below 2% in September for the first time in three years. Despite high wage growth, inflation is expected to hit the 2% target by 2025.

Crypto

Crypto Market Weekly Performance:

Source: quantifycrypto

Bitcoin’s recent price surge, with a 10% increase over the past seven days, has brought it close to retesting the $70,000 mark. This upward momentum suggests that Bitcoin could be on the verge of hitting a new all-time high. The factors such as easing global monetary policies and increased capital inflows into crypto are driving this rally. If Bitcoin surpasses $70,000, it could signal further gains and heightened investor interest.

The U.S. Securities and Exchange Commission (SEC) approved options trading for several spot Bitcoin ETFs, leading to a massive $2 billion inflow in just one week. This move is expected to attract more investors and enhance market participation.

Next Week’s Outlook

Economic Events 

In the US, flash estimates for the S&P Global PMIs will offer an early glimpse into private sector performance for October. Durable goods orders are expected to have dropped by 0.9% in September, after remaining flat in August. 

Additionally, it’s worth keeping an eye on existing and new home sales, the final figures for the Michigan Consumer Sentiment. Also, several Fed officials are also scheduled to speak.

Earning Events 

Next week, several major companies are set to report their earnings. Some notable ones include Tesla (TSLA), Coca-Cola (KO), General Electric (GM), IBM (IBM) and Boeing (BA).