Stock Market Update

The stock market remains on track for a lower open as several heavyweight stocks sink after their latest earnings report while this morning's bach of economic data highlighted that inflation remains above target.

Q3 GDP increased at an annual rate of 3.4% (Briefing.com consensus: 3.0%), led by increases in consumer spending, investment, and government spending, and the GDP Price Index increased 2.2% (Briefing.com consensus: 3.5%), down from a lofty 6.1% in the second quarter.

The key takeaway from the report is that it conveys an economy that is operating on a solid growth track in the face of headwinds that include higher interest rates, higher oil prices, and higher tariffs.

Initial jobless claims for the week ending October 24 decreased by 1,000 to 194,000 (Briefing.com consensus: 196,000). Continuing jobless claims for the week ending October 17 decreased by 21,000 to 1.701 million.

The key takeaway from the report is that the historically low level of initial jobless claims points to a labor market that remains relatively full on account of a solid demand outlook for goods and services.

Personal income increased 0.2% month-over-month (Briefing.com consensus: 0.3%) in September following an upwardly revised 0.3% increase (from 0.2%) in August. Personal spending rose 0.5% month-over-month (Briefing.com consensus: 0.3%) following a 0.9% increase in August. The PCE price Index was up 0.5% month-over-month (Briefing.com consensus: 0.5%), which left it up 3.6% year-over-year versus 3.4% in August. The core PCE price Index jumped 0.3% month-over-month (Briefing.com consensus: 0.3%), leaving it up 3.1% year-over-year versus 3.0% in August.

There are two key takeaways from the report. The first is that spending outpaced income growth, which speaks to the strain of higher living costs. The second is that the PCE Price Index moved further away from the Fed's 2.0% target, which should have the Fed tracking to another rate hike in December.