Wednesday's Scoop: Stumble☀️

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Here’s what you need to know today to inform your work, spending, and investments:

1. People keep spending enough to support the economy.

2. Companies ramped up hiring this month.

3. A brief drop in mortgage rates spurred a wave of home buying.

Unemployment Rate: 4.1%
^{Relatively low, but up from 50-year lows}

People keep spending enough to support the economy. The Commerce Department reported that the economy expanded at a 2.8% annual rate in the third quarter, a bit below the 3.1% economists expected and down from 3.0% in the spring. Strong consumer spending, which makes up about two-thirds of economic activity, jumped 3.7%—the best since early 2023—and was a significant driver of growth. Federal government spending also surged by 9.7%, mainly due to a 14.9% increase in defense spending. However, a rise in imports, which counts against growth in the Gross Domestic Product (GDP) calculation, offset some of these gains. Despite higher borrowing costs and price concerns, resilient spending continues to fuel the economy.

Companies ramped up hiring in October. According to payroll firm ADP, private companies in the US added a surprising 233,000 jobs in October, far exceeding economists' expectations of about 113,000. This marks the strongest job growth since July 2023. What's remarkable is that this hiring surge happened despite challenges like the two major hurricanes, Helene and Milton, that hit the Southeast and strikes at plane manufacturer Boeing and some East Coast ports. The hiring was widespread across sectors such as education and health services, trade and transportation, construction, and leisure and hospitality. Manufacturing was the only sector that lost jobs, mainly due to the 33,000-worker strike at Boeing. This continued hiring pace is good news for job seekers and provides hope that companies aren’t yet turning to layoffs as business slows.

30yr Mortgage Rate: 6.5%
^{That’s down from 7.9% a year ago. (MBA)}
Median Home Price: $404,500
^{That’s up from $393K a year ago. (Existing Homes, NAR)}

Cheaper mortgage rates spurred more home sales last month. Pending home sales in the US jumped significantly in September, marking the biggest increase in over four years. According to the National Association of Realtors, contracts to buy previously owned homes rose 7.4% last month, far exceeding economists' expectations of a 1% rise. This surge is attributed to lower mortgage rates in late summer and more homes available for sale, giving buyers more options. Sales increased in all regions of the country, indicating widespread buyer interest. However, mortgage rates have climbed again since September, which might affect future sales.

The Market: ⬇️ -0.3%
S&P 500: 5,813.67
1Mo: +1% | 1Yr: +40% | 5Yr: +90%

The market drifted lower today as investors struggled to digest a mixed mess of economic data. As we hear from more companies about their third-quarter results, the story seems to be that Big Tech is doing well, but sales are slowing broadly, and companies have reached the end of their efficiency improvements to boost profits.