Daily market snapshot

Published November 1, 2024
Angelo Kourkafas
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Friday, 11/01/2024 p.m.

  • Stocks rise to kick off November – U.S. equity markets finished higher on Friday, helped by tech earnings and expectations that the Fed will cut interest rates next week. A weak but also noisy jobs report that was impacted by the hurricanes and the Boeing strike initially drove yields lower, but the move later reversed and the 10-year Treasury yield finished at a four-month high*. On the corporate front, shares of Amazon climbed 6% after the company reported better-than-expected profitability, and shares of Intel rose roughly 8% on positive guidance*. On the flip side, Apple's earnings were met with some skepticism after a modest disappointment in revenue guidance. Overall, sentiment was positive to start the new month, with all major indexes higher, while the traditionally defensive sectors underperformed. Elsewhere, oil prices were marginally higher, as investors digested headlines about potential Iran retaliation to last weekend's airstrikes.
  • Storms and strike drive soft jobs report – The U.S. economy added 12,000 jobs in October, missing consensus expectations for a 100,000 increase, and the slowest pace of hiring since 2020. Health care and government continued to drive the hiring, while manufacturing employment decreased by 46,000 jobs, largely due to the Boeing strike*. The two recent hurricanes also likely had an impact, as the number of workers who reported they couldn’t be at work due to bad weather surged, creating additional noise in the data. Nonetheless, the prior two months' job gains were revised downward, indicating that the September report was not as strong as it first appeared, providing more confidence that the Fed will continue to cut rates in its two remaining meetings of the year. The rate of unemployment held steady at 4.1%, and the hourly wage gains held steady at 4%*. The key takeaway, in our view, is that temporary disruptions had a discernible impact on the labor market last month, but, when trying to isolate these factors, the trend of a gently cooling labor market likely persists, allowing the Fed to continue removing its restriction in the months ahead.
  • Higher yields and election uncertainty weighed on October sentiment – After five months of gains, stocks posted a modest decline last month, as a rally in Treasury yields and next week's U.S. election uncertainty provided reasons for caution. October was the worst month for government bonds in two years, driven by a combination of stronger-than-expected economic and inflation data that led to a shift in Fed expectations*. Concerns over U.S. debt also added to the recent bond volatility. Next week the market will be focused on the presidential election, which may trigger a knee-jerk reaction. Yesterday's rise of the volatility index (VIX) to the highest since August is consistent with the historical pattern of bigger price fluctuations around Election Day*. Despite the near-term uncertainty, the fundamental environment remains supportive. Yields appear to be rising for the right reasons, with the economy resilient, as indicated by this week's GDP data, and recession probabilities have dropped. We would view any election-driven pullback opportunistically, and we don't expect much further upside in yields as the Fed gradually cuts interest rates further through 2025.

Angelo Kourkafas, CFA 
Investment Strategy

Source: *FactSet

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