In a week dominated by earnings reports, the S&P 500 closed at 5,728, making it two down weeks in a row. Monday through Wednesday was essentially flat with the S&P 500 closing Wednesday five points above last Friday. Then came Thursday, the last day of October, and things changed significantly. Concerns about the rising costs of AI led to a sharp sell off in the tech sector, with the S&P 500 gapping down at the open. Closing at session lows, the tech heavy NASDAQ 100 was off over 2.7% and the S&P 500 was down over 1.8%. As such, it turned October into a negative month, breaking a streak of five up months. On Friday the October jobs report showed the economy added just 12,000 jobs, the weakest level since December 2020. However, the unemployment rate held steady at 4.1% and Amazons earnings report boosted the market with a rebound from Thursdays lows. All told, five Magnificent 7 stocks reported earnings this week, with Amazon and Google both up over 4% on the week, Meta flat, and Microsoft and Apple down in the 3% to 4% range. From a technical perspective, the S&P 500 made a new record high on Friday, 18 October. We noted that the S&P 500 has been down for two weeks in a row, but of more concern is that both of those weeks had lower highs and lower lows than the previous week. Three other concerns that occurred this week are 1) the S&P 500 has crossed below its 20 day Moving Average (MA), 2) the 20 MA has turned downward for the first time since 16 August, and 3) the 10 Exponential MA has crossed below the 20 MA. For next week we have the election on Tuesday, followed by the Fed Rate decision on Thursday. For TSP TIPS and based on the above concerns, we are recommending a slight reduction in equity exposure. As such, we recommend the following new investment mix.
In a week dominated by earnings reports, the S&P 500 closed at 5,728, making it two down weeks in a row. Monday through Wednesday was essentially flat with the S&P 500 closing Wednesday five points above last Friday. Then came Thursday, the last day of October, and things changed significantly. Concerns about the rising costs of AI led to a sharp sell off in the tech sector, with the S&P 500 gapping down at the open. Closing at session lows, the tech heavy NASDAQ 100 was off over 2.7% and the S&P 500 was down over 1.8%. As such, it turned October into a negative month, breaking a streak of five up months. On Friday the October jobs report showed the economy added just 12,000 jobs, the weakest level since December 2020. However, the unemployment rate held steady at 4.1% and Amazons earnings report boosted the market with a rebound from Thursdays lows. All told, five Magnificent 7 stocks reported earnings this week, with Amazon and Google both up over 4% on the week, Meta flat, and Microsoft and Apple down in the 3% to 4% range. From a technical perspective, the S&P 500 made a new record high on Friday, 18 October. We noted that the S&P 500 has been down for two weeks in a row, but of more concern is that both of those weeks had lower highs and lower lows than the previous week. Three other concerns that occurred this week are 1) the S&P 500 has crossed below its 20 day Moving Average (MA), 2) the 20 MA has turned downward for the first time since 16 August, and 3) the 10 Exponential MA has crossed below the 20 MA. For next week we have the election on Tuesday, followed by the Fed Rate decision on Thursday. For TSP TIPS and based on the above concerns, we are recommending a slight reduction in equity exposure. As such, we recommend the following new investment mix.