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Stocks Rise as PCE Falls in Line With Expectations, Pending Home Sales Sank in September
• US stocks rose Friday as investors keyed in on promising economic data. September’s consumer spending figures held steady despite rampant inflation. Last month’s PCE rose, but was largely in line with expectations. That’s especially important ahead of this week’s rate hike decision from the Fed, as the PCE is the central bank’s preferred inflation metric.
• There was some added pressure on the tech sector to close out the week. Amazon (AMZN) posted weaker-than-expected sales for its most recent quarter, while Apple (AAPL) warned iPhone sales weren’t meeting its internal estimates. That said, Apple did beat analyst expectations, as did chip maker Intel (INTC), which helped give tech a boost.
• Pending home sales plummeted 10% on a monthly basis in September, as the housing market continues to soften. Economists had predicted a 4% drop. Year-over-year sales were down 31%. This is most directly linked to rising mortgage rates.
What to Be on the Lookout for Today
• Investors will be hoping to avoid any scares this Halloween, all while the economic calendar is relatively light on reports. October’s Chicago PMI or Purchasing Manager Index is due.
• Watch for insurance giant Aflac (AFL) to share its Q3 results. The company just named Bradley Dyslin as Global Chief Investment Officer, taking over for the retiring Eric Kirsch.
Debt Payoff Strategy: The Debt Fireball Method
This strategy takes a hybrid approach to the traditional snowball and avalanche methods of paying down debt.
We call it the fireball method because it can help you blaze through costly bad debt faster so you can accomplish the things that matter to you. The steps include:
• Categorize all debt as either “good” or “bad.” (Debts with a less than 7% interest rate are “good.” Debts with a higher than 7% interest rate that do not have the potential to increase your net worth are considered “bad” debt under this method.)
• List “bad” debts from smallest to largest based on their outstanding balances.
• Make the minimum monthly payment on all outstanding debts, then funnel any excess funds to the smallest of your “bad” debts.
• When that balance is paid in full, you’d go on to the next smallest on the bad-debt list. Torch those balances until all your bad debt is repaid.
• When that’s done, you’d keep paying off your “good” debt on the normal schedule while investing in your future. Then you could start applying the money you used to pay toward your “bad” debt to a financial goal, such as saving for a house, starting a business, saving for retirement, etc.
Pros: The math here may make more sense because you’re taking on more expensive debt before less-expensive debt. And it can also work from a psychological perspective because the payoff tends to accelerate as you approach the finish line.
Cons: If you’re more interested in dumping all your debt first before investing in the future, this approach might not satisfy your need to make even low-interest debt a payoff priority. Also, it typically isn’t as mathematically efficient as the avalanche method — though it could be more cost-effective than the snowball method.
Ready to tackle your debt head on? A personal loan from SoFi can help you consolidate your debt into one easy-to-manage monthly payment.
A Few Headlines That Should Be on Your Radar
It’s a busy week on the earnings calendar with dozens of companies set to report their Q3 results. Financial services companies like PayPal (PYPL) and Block Inc (SQ) will clarify how America’s finances are trending. Additionally, on Wednesday, the Federal Reserve will announce its decision on interest rates – with another hike expected. Directly afterwards, Chair Jerome Powell will shed insight as to the central bank’s ongoing efforts to curb inflation. Read more >> With his $44 billion acquisition of Twitter (TWTR) now complete, Elon Musk is getting started on his plans to rebuild the social media giant. It involves a focus on engineers, free speech, and a mysterious app called X. Meanwhile, the billionaire and Tesla (TSLA) chief will have his hands full dealing with a potential revolt from Twitter’s existing employees. He already fired a series of top-level executives. What comes next? Read more >> Chevron (CVX) and Exxon Mobil (XOM) earnings are in and the results are incredible – for shareholders, at least. Exxon made so much money that it’s now challenging Apple (AAPL) for the title of “world’s most profitable company”. But not everyone is pumped about these gas prices. Many people are voicing concerns over prices at the pump — including the president himself. Read more >> Federal student loan forgiveness can be life changing, but keep an eye out for offers of debt relief that may be scammers in disguise. While students nationwide apply for federal student loan forgiveness, hackers and scammers have updated their tricks to fool you into sharing your personal information. Here’s what to look out for. Read more >>Not-So-Breaking News
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Apple (AAPL) posted somewhat mixed results to close out the week. It beat expectations on the top and bottom lines, but also shared that iPhone sales have been weaker than expected. The company continued to withhold any quarterly guidance due to uncertainty, a trend it’s followed since 2020.
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Chip-making giant Intel (INTC) beat third quarter expectations for revenue and profits, while announcing plans to cut costs by billions of dollars. CEO Pat Gelsinger maintains the company is getting more efficient across the board and taking steps to optimize its headcount.
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Colgate-Palmolive (CL) fell short of estimates for the third quarter as inflation pushed the consumer products giant’s costs higher. The company says it was harmed by the strong U.S. dollar and adverse exchange rates.
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Charter Communications (CHTR) failed to meet expectations for profit despite increasing its number of residential internet customers. The cable giant saw its internet subscriber base grow by 61,000 last quarter, but also lost 211,000 residential video customers.
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AbbVie (ABBV) posted a mixed-bag earnings report with increased sales but tightened guidance. However, the Botox producer raised its quarterly dividend, which is almost always a positive sign in the eyes of investors.
Financial Planner Tip of the Day
“While saving an emergency fund is one of many competing financial priorities, having a cushion to catch you when you fall can prevent a minor calamity from spiraling into lasting debt. The toughest part may be getting started and staying motivated. Just remember, you walk 10 miles by walking 10 feet at a time.”
Brian Walsh, CFP® at SoFi