Market Wrap | Investor Resilience Shines as Tech Giants Propel Major Indices Higher Amid Mixed Economic Signals
On November 1, U.S. financial markets ended the day on a high note, with all three major indices closing higher. The S&P 500 climbed 0.41% to 5728.80, the Dow Jones advanced 0.69% to 42052.19, and the Nasdaq rose 0.80% to 18239.92, reflecting investor resilience amid mixed economic signals.
The employment data released on Friday depicted a sluggish labor market with only 12,000 non-farm jobs created in October, falling short of expectations amid disturbances from significant weather events and labor strikes at Boeing. Despite this, the unemployment rate remained static at 4.1%, with average hourly earnings showing a mild annual increase of 4%.
In the corporate sector, Amazon shares surged over 6% thanks to robust growth in its cloud and advertising businesses, exceeding earnings expectations. Meanwhile, Intel witnessed an impressive 8.5% rise following its stronger-than-anticipated earnings report and revenue guidance.
The recently published jobs report illustrated the detrimental effects of natural phenomena, such as hurricanes Milton and Helene, alongside the ongoing Boeing strikes, which hampered employment figures substantially. Concurrently, investors prepared for next week's U.S. Presidential election and Federal Reserve policy meeting.
Meanwhile, tech giant Apple reported respectable earnings for its fiscal fourth quarter, with total revenue of $94.9 billion, up 6%, despite pressures in its Greater China segment. Net income fell by 36% year-on-year to $14.74 billion, marking a decline in profitability exacerbated by tax challenges.
Tech stocks presented a curious phenomenon whereby even surpassing expected earnings wasn't enough to gratify investors, indicating heightened anticipations from market participants. Such sentiment was reflected in the mixed reactions during the current earnings season where impressive earnings sometimes met with lethargic market responses.
In broader macroeconomic data, October's PMI for the manufacturing sector registered its weakest figures since July 2023, dragged down by dual hurricanes which disrupted factory activities in the Southeastern U.S. This PMI recorded its seventh consecutive month below the growth threshold, exacerbating concerns over the sector's outlook.
Looking forward, economic actors are scrutinizing policy shifts with expectations that the Federal Reserve may proceed with a modest interest rate cut of 25 basis points in its next meeting, a move influenced by prevailing economic conditions.