US equities having another mixed day of trading as a complete deluge of earnings has again descended upon us and bringing with it more interesting and/or disappointing datapoints and insight from Q3 to digest and process (to say the least!…). In the perfect demonstration of sector performance divergence- we saw the Dow and Russell hold in +ve territory, while the relatively more tech-heavy SPX fell lower as well as the heavy tech-heavy Nasdaq was under more significant pressure.

Initially, it looked like Microsoft (-7.7%) and Alphabet’s (-9.6%) reporting foibles overnight would not interrupt the current uptrend. Markets spent the first few hours of the day climbing higher in the face of tech-versity, assisted by the Bank of Canada after they surprised with a smaller than expected rate hike. Surely, a leading indicator for the Fed!? The USD 10yr even fell below 4% for a spell – another positive sign. But then came a dose of reality…or mean reversion.

Markets drifting higher to kick the week off ahead of much-anticipated earnings from the likes of “Big Tech”. Equities seemed largely unimpressed with depressed PMIs across the globe- all signals pointing to the tightening-induced contraction we’ve been on the lookout for. US Manufacturing component fell below the 50 mark for the first time since June 2020 along with Services well below expectations, and therefore, bringing a disappointing Composite print.

Markets moving higher to close out the week in Friday trading on a positive note. For those counting, that’s 3/5 higher for the week and swinging the pendulum back from last week’s losses. In sticking to theme- it was another day, another lesson of ‘don’t fight the Fed’. But in an interesting plot twist, we found ourselves re-calibrating the skew away from that entirely of the hawks now slightly a touch back to the doves. Or, in other words, rates moved lower (off of new peak levels we’ve not seen in the past decade) and Equities rallied as a result.

In a moment that will be remembered for generations (and apologies for including the UK in a US wrap), the shortest tenured British Leader resigned. Ahead of this (and after), there was little changed from a macro perspective. We continue to watch 1640/1780 on the Russell Futures, and 3806 as a resistance on S&P futures – which we barely looked to approach, let alone test, before turning lower. Pre-market earnings did send futures higher early on, with both AT&T and American Airlines reporting better than expected numbers.

Markets found relief in a broad-based rally today– ~95% of the S&P trading in the green- and what we would notably tag as a bear market bounce. (pssst- the 10yr yield has quietly crept back and again closed above 4% despite equities rallying higher and an ongoing reminder that inflationary concerns remain amongst us.) After suffering losses 4 out of the 5 trading days last week or a grand total of 7 out of the previous 8 sessions to ultimately reach a 50% retracement of the Covid rally on the S&P, we find ourselves (alongside UK PM Truss…) taking a necessary pause-and-reflect to start the week off.

Yesterday was a bit of a jaw dropper, but from a macro perspective things remained unchanged. Going into today the big question was whether the bounce would continue, but a surprise from both Retail Sales and University of Michigan prevented that from happening. The headline Retail Sales figure missed, and spending in 7 of the 13 retail categories declined last month. University of Michigan sentiment did come in higher than expectations, but the one year inflation outlook ticked up for the first time in 7 months.