Market Update: Wed, Oct 30, 2019 | LPL Financial Research

Daily Insights

Busy day. Stocks are little changed this morning as investors digest third quarter gross domestic product (GDP) data before a Federal Reserve (Fed) policy decision later today. The Fed’s decision is scheduled to come out at 2 p.m. ET, followed by Fed Chair Jerome Powell’s post-meeting press conference. Financial markets are largely pricing in another 25 basis point (0.25%) rate cut today, which would be the Fed’s third cut of the cycle. We think Powell’s press conference remarks will be especially scrutinized, as he may try to prepare investors for what could be the end of this particular “mid-cycle adjustment” in rates.

Consumer spending propels GDP. GDP rose 1.9% in the third quarter, above consensus estimates for a 1.6% gain. Consumer spending added 1.9 percentage points to the GDP increase during the quarter, while government spending added 0.4 percentage points. Output growth is slowing, but quarterly GDP growth has averaged 2.3% in 2019, in line with average GDP growth for this cycle. We’ll dig into the third-quarter GDP report more today on the LPL Research blog.

Consumer confidence slides. The Conference Board’s Consumer Confidence Index unexpectedly slid for a third straight month in October. Survey respondents’ view of economic expectations fell to a nine-month low, dragging down the overall index, while sentiment on present conditions increased. The U.S. economy has been unusually reliant on consumer spending for GDP growth lately, a theme echoed in this morning’s data. Even though consumer confidence is still high historically, we’d like to see sentiment pick up as trade and geopolitical tensions continue to thaw.

LPL Research on Bloomberg Radio. LPL Financial Senior Market Strategist Ryan Detrick was on Bloomberg Radio recently to discuss new highs and more. You can listen to the full interview here (starts at the 28:40 mark).

 

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