New York, Oct. 31, 2024 – U.S. equity markets concluded the final week of October with modest losses, as a surge in Treasury yields and persistent economic jitters weighed on investor sentiment during the last trading days of the month.
For the full month, the S&P 500 slipped 0.6%, the Dow Jones Industrial Average fell 1%, and the Nasdaq Composite edged down 0.1%. Markets responded sharply to a dramatic climb in Treasury yields, which surged 48 basis points by month-end, with the 10‑year Treasury finishing around 4.27%.
Yield Spike Drains Risk Appetite
Early October saw bond yields climbing steadily—2‑, 5‑, and 30‑year Treasury yields increased by 53, 60, and 36 basis points, respectively. The 10‑year yield climbed roughly 48 bps over the month to end at 4.27%. This yield surge reflected strong economic data that undermined expectations of imminent rate cuts from the Federal Reserve. As yields rose, equity market rallies lost momentum entering the last week of trading, capping October’s modest decline.
Sector Performance Shows Divergence
Sector performance was polarized. Communications services and financials continued to hold their ground, while health care, consumer staples, and real estate suffered notable losses—down between 3% and 4.6% for the month. The real estate sector, in particular, faced headwinds as mortgage rates spiked, adding to already elevated borrowing costs for homeowners and construction firms.
Tech stocks weighed heavily on benchmark indices as well. During the final trading day, Oct. 31, the S&P dropped 1.9%, the Nasdaq fell 2.8%, and the Dow slid 0.9%, due largely to declines in heavyweight tech names including Microsoft and Meta. Despite recent profit beats, investor expectations outpaced results, prompting steep pullbacks.
Economic Data and Inflation Signals
Economic indicators painted a mixed picture. Third‑quarter GDP remained solid at approximately 2.8% annualized growth. Job growth slowed sharply, with the economy adding only about 12,000 jobs—the weakest monthly increase since December 2020. Inflation dynamics were nuanced: headline CPI continued easing, but services and shelter cost inflation persisted in remaining above target, keeping core inflation sticky.
Market Volatility and Investor Caution
Volatility spiked in bond and equity markets. The ICE Merrill Lynch MOVE Index reached its highest level since December 2023, while the VIX rose amid falling stocks and uncertain investor sentiment. Fluctuating data and a turbulent lead‑up to the presidential election added further to market unease.
Borrowing Costs Bite Broader Economy
Rising yields pressured mortgage rates—the average 30‑year mortgage hit approximately 6.44% by mid‑October, hampering new home sales and cooling real estate activity. Corporate bond and municipal debt markets also saw yield increases, translating into higher financing costs for businesses and local governments.
Looking Ahead: Key Drivers for November
Investor attention now shifts to upcoming economic releases—November’s CPI, October jobs data, and Fed policy guidance on the November 7 meeting. Markets are closely watching whether inflation remains stubbornly high or momentum builds for rate cuts—and whether fiscal deficits linked to the election intensify Treasury issuance and upward yield pressure.
October’s market performance reflected cautious optimism tempered by economic uncertainty. Although growth remained steady, rising yields, persistent inflation in core sectors, and geopolitical factors contributed to a cautious tone. As November unfolds, investors will be tracking key indicators that may shape the Fed’s trajectory and equity market direction.
