Hero Banner

We are delighted to share our October Market Outlook which provides you with our current thinking on the economy, markets and portfolio positioning. In addition, we’ve shared the key economic statistics that we are watching closely.

Economy & Markets

  • Consumer spending remains the driver of economic growth as spending on services such as dining out and travel exceeded expectations in the month of September.
  • While the economy continues growing there has been a slowdown in manufacturing, illustrated by the ISM index at 47.2 in September. A reading below 50 for the index indicates a slowdown.
  • Inflation data continues to show a gradual cooling, with the expectation for September to be reported at 2.3%. Expectations for 3rd quarter GDP growth are currently at 2.5%+, which will provide a good amount of momentum heading into 2025.

Equities

  • The S&P 500 rose 2.1% in September and finished the 3rd quarter with gains of 5.5%. Year-to-date, the S&P 500 is higher by 22%. Earnings per share estimates have moderated but expectations for solid growth remain in place for this year (+9%) and next (+14%).
  • Year-to-date, all 11 economic sectors have positive performance, with 10 of 11 sectors increasing by greater than 10%. During the 3rd quarter, performance across the market expanded with participation across geographic regions, sectors, styles, and market-capitalization. Sectors that lagged in the first half of the year (utilities, REITs, and financials) were the leaders in the quarter as shares in technology, communications, and energy lagged.

Fixed Income

  • The yield curve continued to steepen as the Federal Reserve Board reduced the Federal Funds rate by 50 basis points at their September meeting.
  • Credit spreads tightened, but are still not showing any signs of stress, signaling comfort with the economic outlook.

Employment

  • September’s employment report once again confirmed the strength of the jobs market and the underlying strength in the US economy. The unemployment rate declined to 4.1% from 4.2% in August and jobs grew by 254,000, an upside surprise of 100,000 jobs.
  • Wages rose by 4.0% from the prior year which is ahead of the latest annualized CPI of 2.5%. Workers are seeing real wage growth which supports continued spending by the consumer.

Federal Reserve

  • The Fed cut interest rates by 50 basis points at its September meeting which was cheered by investors. Chairman Powell made clear that this larger cut was not signaling the path of future cuts and thereby kept expectations for two more 25 basis point cuts for the remainder of 2024 as the base case for investors.
  • Major Central Banks in Europe and China also communicated their support for lower rates. The European Central Bank and PBOC in China both began cutting rates this year to spur economic growth. This monetary stimulus should enhance global growth in 2025.

Issues to Watch

  • The tragic damage caused by hurricanes Helene and Milton will certainly have a negative impact on the local and national economy. The short dockworkers strike and the ongoing strike at Boeing are being watched carefully for further economic impacts.

A chart depicts economic metrics for October 2024

1Data provided by Bloomberg. Metrics are as of month-end or most recent publication
2Provided by U.S. Real GDP Economic Forecast Survey Median 
3Provided by World Real GDP Economic Forecast Survey Median 
4Provided by Bloomberg Intelligence Forecast 
5Provided by World Probability Forecast 
6Arrows represent a month-over-month change

a graph depicts index returns for October 2024

Asset Allocation / Tactical Positioning - October 2024

A chart depicts asset allocation and tactical positioning for October 2024

1Equity tactical weights are relative to the Cambridge Trust Core Equity allocation and is comprised of 80% S&P 500 and 20% MSCI AC World ex-U.S. Index. 
2Fixed Income tactical weights are relative to the Cambridge Trust Core Taxable allocation and is comprised of 100% Barclays Intermediate Gov/Credit Index. 
3Below investment grade holdings include high yield and emerging market debt mutual funds. Represents an out-of-benchmark allocation that will be reflected as an overweight position relative to the Barclays Intermediate Gov/Credit Index if any allocation is held. 
4Alternative tactical weights represent an out-of-benchmark allocation that will be reflected as an overweight position when utilized and neutral position when not. 
5Direction arrow highlights any recent changes of the overall allocation after a recent tactical asset allocation or strategy change. Last changes were made at September 2024 Asset Allocation Committee meeting.

Cambridge Trust Wealth Management is a division of Eastern Bank. Views are as of October 2024 and are subject to change based on market conditions and other factors. The opinions expressed herein are those of the author(s), and do not necessarily reflect those of Eastern Bankshares, Inc., Eastern Bank, Eastern Bank Wealth Management, Cambridge Trust Wealth Management or any affiliated entities. Views and opinions expressed are current as of the date appearing on this material; all views and opinions herein are subject to change without notice based on market conditions and other factors. These views and opinions should not be construed as a recommendation for any specific security or sector. This material is for your private information, and we are not soliciting any action based on it. The information in this report has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is neither representation nor warranty as to the accuracy of, nor liability for any decisions made based on such information. Past performance does not guarantee future performance. Investment Products are not insured by the FDIC or any federal government agency, are not deposits of or guaranteed by any bank, and may lose value.