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Weekly NewsletterOctober 29, 2024

This Week on Wall Street – Week of October 28th

We kicked off the week with a rebound in stocks, fueled by dip-buying after last week’s sell-off.

This Week on Wall Street – Week of October 28th

Market Commentary

Stocks began the week slightly higher while Fixed Income faced renewed pressure. 

Although the index level performance recently has been flat to up, looking beneath the surface tells a different story. Breadth has notably weakened, with the percentage of stocks trading above their 50-day moving average dropping from 73% to 53% in just the past week. This shift highlights the recent outperformance of mega-cap stocks, as the average stock has struggled to keep pace. 

This trend is reflected in our Newton Models, where all major indexes have softened compared to the previous week, though Large Caps have shown relative resilience. Foreign markets continue to struggle to gain momentum, and Fixed Income remains weak as markets have dismissed the likelihood of a 50bps rate cut at the next Fed meeting. Expectations now center around two 25bps cuts at the upcoming meetings before 2025. 

The S&P 500’s forward P/E ratio is near 22, placing it in a historically high valuation range. Although valuation alone is a poor short-term timing indicator, it offers a valuable perspective on longer-term returns. To keep pushing higher and justify these valuations, companies will need to continue showing strong earnings. So far, earnings have shown mixed results in the third quarter. 37% of companies in the S&P have reported, with 75% beating EPS estimates, largely in line with historical averages. If the reporting season continues the trend so far, a 3.6% YoY growth rate would mark the fifth consecutive quarter of YoY earnings growth for the index. However, it will also be the lowest earnings growth rate since Q2 2023, and, with downward earnings revisions rising, there are some indications of slowing earnings moving forward.  

This week is chock-full of economic data. Given that it will be the first Friday of a new month, that means we get a big read on the health of the labor market. Expectations are calling for a gain of 110,000 from 254,000 last month. Some of the decrease could be attributed to the recent hurricanes and strikes. We also have a 3rd quarter GDP print where expectations are for a 3.2% YoY increase compared to last quarter’s 3% print. 

Within sectors, Newton models are showing strength out of Technology, Utilities, and Real Estate. Energy has rebounded slightly but remains the weakest sector on a relative basis. 

Economic Releases This Week

Tuesday: S&P Case Shiller Home Price Index, Consumer Confidence, Job Openings

Wednesday: ADP Employment, 3rd Quarter GDP, Pending Home Sales

Thursday: PCE Index, Initial Jobless Claims, Chicago PMI

Friday: US Labor Report, ISM Manufacturing

Stories to Start the Week

Japan’s prime minister Shigeru Ishiba has vowed to continue ruling the country despite a bruising loss suffered by his party at the general election. 

Oil prices lost ground on Monday after Iranian energy facilities were undamaged during an Israeli attack over the weekend. 

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What is Newton?

Our Newton model attempts to determine the highest probability of future price direction by using advanced algorithmic and high-order mathematical techniques on the current market environment to identify trends in underlying security prices. The Newton model scores securities over multiple time periods on a scale of 0-20 with 0 being the worst and 20 being the best possible score.

Trend & level both matter. For example, a name that moves from an 18 to a 16 would signal a strong level yet slight exhaustion in the trend.

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Technical trading models are mathematically driven based upon historical data and trends of domestic and foreign market trading activity, including various industry and sector trading statistics within such markets. Technical trading models, through mathematical algorithms, attempt to identify when markets are likely to increase or decrease and identify appropriate entry and exit points. The primary risk of technical trading models is that historical trends and past performance cannot predict future trends and there is no assurance that the mathematical algorithms employed are designed properly, updated with new data, and can accurately predict future market, industry and sector performance.

About This Series

Last Week on Wall Street

Last Week on Wall Street is Waterloo Capital's weekly market recap, published every Monday morning to keep advisors and clients informed on the most significant developments from the prior trading week. Each edition synthesizes equity market performance, fixed income moves, macroeconomic data releases, and notable corporate earnings into a concise, actionable read — cutting through the noise so our readers can focus on what actually matters for long-term wealth management.

Our research team tracks the S&P 500, Dow Jones Industrial Average, NASDAQ Composite, and 10-year Treasury yield as primary benchmarks, while also covering sector rotations, commodity swings, and policy shifts from the Federal Reserve and Washington. When major cross-asset moves occur — such as the historic gold selloff covered in this edition — we dig into the mechanics and the likely ripple effects on diversified portfolios, helping clients contextualize volatility without reacting impulsively.

Our Research Approach

Evidence-Based Perspective for Long-Term Investors

Waterloo Capital's investment research is grounded in fundamental analysis and long-term thinking. We believe that disciplined, evidence-based investing — anchored in each client's specific goals, risk tolerance, and time horizon — consistently outperforms reactive decision-making driven by short-term headlines. Our weekly commentary is designed to inform, not alarm: we put market moves in their proper historical context so that clients can hold conviction in their financial plans through periods of uncertainty.

As an SEC-registered investment advisor headquartered in Austin, Texas, with offices across the Southwest and Southeast, Waterloo Capital serves high-net-worth individuals, families, and institutions. Our advisors use proprietary research like this weekly recap as one input among many — alongside in-depth portfolio reviews, tax planning, and estate strategy — to deliver comprehensive wealth management tailored to each client relationship. To learn more about how our investment philosophy and ongoing market research can serve your financial future, contact our team directly.

Investment Disclosure: The information contained in this article is provided for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal. Waterloo Capital, LP is an SEC-registered investment advisor. Registration does not imply a certain level of skill or training. Please consult with a qualified financial professional before making any investment decisions.

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