Masco manufactures a variety of home improvement and building products. The company’s $5-billion plumbing segment, led by the Delta and Hansgrohe brands, sells faucets, showerheads, and other related plumbing fixtures and components. The $3-billion decorative architectural segment primarily sells paints and other coatings under the Behr and Kilz brands, but it also sells builder hardware and lighting products.

Small- and mid-cap stocks (SMID), despite bursts of outperformance, have underperformed large-caps year to date - as they have over the past five years. But they may be in a better position to generate market-beating returns going forward. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from unrest in the Middle East, the Russian invasion of Ukraine, issues in China, or other geopolitical developments. As well, the prices of SMID stocks generally are lower than the prices of large-caps. SMID stocks can be risky, but despite those risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 20% of the U.S. stock market's capitalization is comprised of SMID stocks.

On Friday, we expect the Bureau of Labor Statistics (BLS) to provide evidence that the cooling U.S. job market remains healthy. Our estimate is for the September unemployment rate to hold steady at 4.2%. We expect nonfarm payrolls to increase by a near-consensus 135,000. While the three-month moving average of payrolls has slowed to 116,000 from more than 240,000 at the beginning of the year, layoffs remain encouragingly low. The four-week average of initial jobless claims declined to 224,750 last week from 231,750 a month prior. This is well below the critical 300,000 that would raise recession flags. With inflation declining towards its 2% objective, the Federal Open Market Committee (FOMC) has lowered the fed funds target by 50 basis points to 4.75%-5.0% to buttress its goal of maximum employment, and Chairman Powell offered the following. "The labor market is actually in solid condition, and our intention with our policy move today is to keep it there." The FOMC will be assessing this week's employment report and the release on November 1 before it deliberates again on November 6 and 7. Based on analysis with the Atlanta Fed's jobs calculator, we'd estimate that average monthly payroll gains of about 112,000 would be needed to hold the unemployment rate at 4.2% over the next year. We expect that average hours worked ticked down to 34.2 and that growth in average hourly earnings remained at 3.8% in September. We also expect the Fed to be monitoring the level of job openings, hires, quits, and layoffs in the Job Openings and Labor Summary report, which will be released with August data tomorrow. The Fed often turns to its business contacts for additional economic insights. Powell said in the September conference call that they were not hearing that companies are on the verge of layoffs. The 50-basis-point rate cut shows that the FOMC wants to keep it that way.

We are raising our third-quarter 2024 forecast for GDP growth to 1.6% from 1.5% based on small adjustments to our model. We are reducing our estimate of 3Q core PCE inflation from 2.5% to 2.2%. We see a U.S. economy that is growing, but may be losing momentum based on our analysis of more than 50 indicators. To be sure, 3% GDP growth in 2Q provides reassurance that we have not entered a recession. We expect growth to slow in the in the second half as a result of restrictive monetary policy. We expect the Fed to start easing this month, which, combined with a drop in the 10-year Treasury rate, should lead to stronger growth by 3Q25. We are maintaining our 4Q24 GDP growth estimate at 1.7% and keeping our full-year 2024 estimate at 1.9%. We expect 2% growth in 2025, with quarterly estimates of 1.7%, 1.6%, 2.4%, and 2.4%. Four indicators driven by broad and timely data support our assessment that the economy is not in a recession but may be losing steam. On September 9, the Federal Reserve Bank of Atlanta's GDP Nowcast was estimating 3Q growth of 2.5%. On September 6, the New York Fed's Staff Nowcast for 3Q was for 2.6% growth, with a 68% probability range of 0.94% to 4.2% growth. The Weekly Economic Index tracked by the Dallas Fed is based on 10 daily and weekly indicators of consumer behavior, the labor market, and production. If, for example, an index value of 2% persisted for an entire quarter, the index would suggest that quarter's GDP would be 2% higher than a year ago. For the week ended August 31, the index was 2.4%, with a 13-week moving average of 1.97%. The Chicago Fed National Activity Index looks at 85 indicators. The three-month moving average was unchanged at -0.06 in July. The Diffusion Index increased to -0.11 in July from -0.13 in June. These readings suggest the economy is growing at a rate slightly below average, but not contracting.