Indices
- Dow 42,052, -62 or -0.15%.
- Nasdaq 18,239, -279 or -1.51%.
- S&P 5,728, -80 or -1.38%.
- MSCI EAFE 2336.19, -25.28 or -1.07%.
- USD10Y 4.361%, +12.8bp or +3.02%.
- WTI Crude $69.33 bbl, -$2.36or -3.29%.
Profit Taking, Noisy Data, Election and Fed Decision on Tap
It was an interesting week full of earnings and economic reports that led investors to take some of their chips off the table and realize profits. Alphabet, Microsoft and Meta all reported great numbers, but the Street focused on their ongoing massive spending in the AI space and decided to take some profits; for the week MSFT traded down -4.73%, META down -2.26%, only GOOGL was rewarded trading up +2.37%. Likewise at Apple, the numbers were great, especially iPhone sales, which represent approximately 46% of their revenues, but the Street focused on declining iPad and Mac sales; AAPL sold off -4.64% for the week.
Economic data was mixed and filled with “noise.” The Job Openings and Labor Turnover Survey showed the least amount of job openings since 2021 suggesting slack in the labor market. However, the ADP Private Payrolls (measures private jobs only) reported strong growth, doubling consensus estimates. Jobless claims fell to their lowest level since early May, also suggesting strength in the labor market. On Friday, the Non-Farm payrolls report (measuring both private and public sector hiring excluding farm jobs and self-employed) was the worst in recent memory, adding only 12,000 jobs vs 110,000 expected. Labor strikes and hurricanes were blamed for the horrific number, but some economists were not convinced and believe that the labor markets are weakening significantly.
All of which leads us to the Federal Reserve’s interest rate decision on Thursday. It appears that the Fed has perfect cover to continue to slash rates but in a measured manner, notwithstanding the surprise 50bp rate cut with which it started this rate cutting cycle; the labor market appears to be showing some signs of weakness, Q3 GDP was good but not great, and the September PCE report (the Fed’s preferred measure of inflation) is hovering just above their 2% target.
The Upcoming Week: Nov 4 - Nov 8
Unlike last week, which was chock full of economic data and earnings, this week is fairly light other than a nation defining Presidential election on Tuesday. Final October Services data will be published, and all eyes will be on the Federal Reserve on Thursday, expecting another rate cut of 25 basis points.
There are no companies reporting this week that should move the markets with their earnings reports. However, there are some interesting firms reporting nonetheless; Super Micro Computer (SMCI), Qualcomm (QCOM), Airbnb (ABNB), and Rivian (RIVN).
Economic Calendar
Monday – N/A.Earnings: Palantir Technologies (PLTR).
Tuesday – Presidential Election! October ISM Services. Earnings: Super Micro Computer (SMCI), one of the companies caught up in the AI/NVDA/AVGO craze and traded up as high as $122 before trending down to the $50s level. This week their accounting firm resigned due to accounting concerns and the stock plunged to $26. It will be fascinating to hear the earnings press conference.
Wednesday – October S&P Services PMI. Earnings: Arm Holdings (ARM), Qualcomm (QCOM), Lyft (LYFT), Mercado Libre (MELI) the Amazon of South America.
Thursday – Initial Jobless Claims, FOMC Interest Rate decision, Fed Chair Powell press conference. Earnings: Ferrari (RACE), Airbnb (ABNB), Rivian (RIVN).
Friday – N/A. Earnings: N/A.
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Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets...Bitcoin, Ethereum, Solana, ACHR, BITB, NVDA, and RIVN.