Weekly Market Recap: Stocks Retreat, Treasury Yields Surge, and Key Economic Data Ahead

Market Overview 

U.S. Equities: After six weeks of gains, markets took a step back. The S&P 500 dropped 1%, while the Dow fell over 2.5%. The Nasdaq eked out a 0.2% gain, driven by growth stocks, while small caps lagged. Earnings reports were mixed—Tesla jumped 22% after beating expectations, while McDonald’s struggled with news of an E. coli outbreak, and Starbucks suspended 2025 guidance. Treasury yields rose, weighing on stocks, especially early in the week. 

International Equities: European stocks ended lower, with the STOXX 600 down over 1%. France’s weak PMI data contrasted with Germany’s modest beat. In Asia, Japan's market fell 2.5% on election uncertainties and lower inflation, while Chinese stocks edged up amid mixed economic stimulus signals. Hong Kong’s property sector dragged the index lower. 

Federal Reserve Insights and Fixed Income 

Treasury yields surged, with both 2- and 10-year yields rising 13 basis points, driven by solid economic data that reduced expectations of near-term Fed rate cuts. The return of the Treasury term premium added pressure, as investors demanded higher compensation for holding long-term bonds.  

Commodities and Currencies 

WTI crude prices rose 3.5% amid fluctuating supply risks tied to Middle East tensions. Gold increased 0.7%, but silver and copper fell slightly. The dollar strengthened on central bank signals of slower rate cuts and ahead of Japan’s election, which may complicate monetary policy there. 

Economic Roundup 

October’s PMI readings exceeded forecasts, reflecting resilience in manufacturing and services. Initial jobless claims dropped to 227,000, easing concerns about Hurricane Helene’s impact, but continuing claims rose beyond expectations. New home sales reached 738,000, though previous months were revised lower. Consumer sentiment improved, with inflation expectations ticking down to 2.7%, though buyers and sellers are both cautious about real estate. 

The Week Ahead 

Key economic data to watch includes: 

Monday: Dallas Fed Manufacturing Activity 

Tuesday: Retail Inventories, FHFA House Price Index, Consumer Confidence 

Wednesday: GDP (Q3), Pending Home Sales, MBA Mortgage Applications 

Thursday: Employment Cost Index, Personal Income & Spending, PCE Price Index 

Friday: Nonfarm Payrolls, Unemployment Rate, ISM Manufacturing PMI, Vehicle Sales 

Markets will likely remain sensitive to corporate earnings, economic data, and political developments as investors brace for the U.S. election.