Daily Sector Snapshot — 10/3/23
Bespoke Stock Scores — 10/3/23
Labor Demand Holds Up
This morning we received two of the latest updates on labor market demand with the release of the August JOLTS report in addition to postings data from Indeed through the end of September. The JOLTS report came in well above expectations (9.61 million versus 8.83 expected) indicating a solid rebound in labor market demand headed out of the summer. In spite of that positive reading, the overall trend of lower openings remains in place and is echoed by Indeed’s data. As shown below, the more timely and higher frequency postings data has also been trending lower since the end of 2021. That being said, the summer has seen those declines decelerating with postings only slightly lower over the past three months. Modeling the JOLTS number on the less lagged Indeed data would predict that postings would remain around these levels next month. In tonight’s Closer, we will provide a full rundown of the latest JOLTS report.
In addition to national reads on job postings, the Indeed data also provides geographic breakdowns by US metro, and in the table below, we highlight the 25 MSAs (metropolitan statistical area) that have seen the best and worst postings growth relative to pre-pandemic baselines as well as how far they have fallen from their respective peaks (we highlight when each of those peaks were as well). Many of those with the highest number of openings relative to pre-pandemic are also those with smaller populations. Conversely, many of the largest metros have seen job postings fall off the most. There have also been a growing number of cities where postings are now below pre-pandemic levels. San Francisco is the worst of these with postings down nearly 20% from baseline.
Chart of the Day – Breadth Reaching Extremes
Bespoke’s Morning Lineup – 10/3/23 – Lights Out
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Yields are higher again this morning, which means stocks are trading lower. It’s gotten to the point where we picture Bill Murray smashing the alarm clock which is playing “I Got You Babe”. The 10-year yield is nearing 4.75% while the 30-year yield has broken above 4.85% as it joins the list of points on the yield curve that are at their highest levels since 2007. The only data on the economic calendar this morning is the August JOLTS report which is expected to show a modest increase in job openings from 8.83 million to 8.90 million.
As rates rise, Utility stocks have been decimated, and yesterday the S&P 500 Utility sector closed 3.2 standard deviations below its 50-day moving average which is the most oversold reading for the sector since February 2021, and it isn’t often that you see the sector get this oversold.
In the short-term, the sector’s 11% decline is the steepest five-day decline since last June, but the difference between these two periods is that back in June 2022, the S&P 500 was down over 10% during that same five-day span while it’s only down 1% in the current five-day span.
The chart below shows the five-day performance spread between the S&P 500 Utility sector and the S&P 500. After adjusting for the S&P 500’s performance, the Utility sector is underperforming the S&P 500 by the widest margin over a five-day period since October 2002!
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Daily Sector Snapshot — 10/2/23
Chart of the Day: Utilities, Dividend Stocks Keep Falling
Rocky Road Ahead?
After a relatively dismal two months for stocks, the market kicked off what has historically been its strongest period of the year today. In the post-WWII period, the S&P 500’s average performance in Q4 has been a gain of 4.1%, which is more than double the 2.0% average gains of Q1 and Q2 and ten times the average gain of Q3 (0.4%).
While Q4 has been positive for equities, the month of October has historically been volatile. Since 1945, the spread between the month’s daily closing high and closing low has been 7.1%. While the average spread for every month except October fits within a 1.3 percentage point range of 4.7% to 6.0%, October is all alone at more than a full percentage point from the high end of that range.
With Q4 being the strongest quarter of the year and October being the most volatile month, they don’t call October the month of market bottoms for nothing. In looking back at every market decline of at least 5% (without a rally of 5%+ in between), market lows have easily been the most prevalent in October. As shown in the chart below, 33 (14.4%) of the ‘market lows’ since 1945 have occurred in October, and the only two other months that account for even 10% of all market lows were March and September. Seasonality is on the side of bulls heading into Q4, but that doesn’t mean the road is smoothly paved.
Bespoke’s Matrix of Economic Indicators – 9/30/23
Our Matrix of Economic Indicators provides a concise summary analysis of the US economy’s momentum. We combine trends across the dozens and dozens of economic indicators in various categories like manufacturing, employment, housing, the consumer, and inflation to provide a directional overview of the economy.
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Bespoke Market Calendar — October 2023
Please click the image below to view our October 2023 market calendar. This calendar includes the S&P 500’s historical average percentage change and average intraday chart pattern for each trading day during the upcoming month. It also includes market holidays and options expiration dates plus the dates of key economic indicator releases. Click here to view Bespoke’s premium membership options.
