Market Summary
On Thursday, the S&P 500 Index ($SPX, SPY) fell by 1.12%, the Dow Jones Industrial Average ($DOWI, DIA) dropped by 0.84%, and the Nasdaq 100 Index ($IUXX, QQQ) decreased by 1.91%. December E-mini S&P futures (ESZ25) saw a decline of 1.07%, while December E-mini Nasdaq futures (NQZ25) fell by 1.86%.
Market Trends
The U.S. stock indexes retreated on Thursday, marking two-week lows for the S&P 500, Dow, and Nasdaq 100. This downturn was driven by strong indications of a cooling labor market, particularly highlighted by a report from Challenger, Gray & Christmas, which noted the highest number of job cuts in October in over 20 years. The semiconductor sector also experienced weakness, contributing to the overall market decline.
Factors Supporting Stocks
Despite the slide in stock prices, a decline in bond yields on Thursday helped mitigate losses. The 10-year Treasury note yield dropped by 7 basis points to 4.09%, bolstered by expectations the Federal Reserve might continue rate cuts following the disappointing labor report from Challenger. Additionally, strong corporate earnings were a plus, with 81% of S&P 500 companies exceeding earnings expectations.
Job Cuts and Economic Impact
In October, U.S. job cuts surged by 175.3% year-over-year to a total of 153,074, marking the steepest increase in seven months and the largest for any October in 22 years. Year-to-date job cuts exceeded 1 million, the most since the pandemic, while hiring plans from employers have dwindled to the lowest levels since 2011.
Federal Reserve Insights
Comments from Federal Reserve officials on Thursday were somewhat discouraging for stocks. Chicago Fed President Austan Goolsbee expressed unease regarding interest rate cuts due to insufficient inflation data during the government shutdown. Similarly, Cleveland Fed President Beth Hammack stated her concerns over high inflation, suggesting a need for a consistent monetary policy to guide inflation back to 2%.
International Market Movements
International stock markets showed mixed results on Thursday. The Euro Stoxx 50 declined by 1.02%, while China’s Shanghai Composite rose by 0.97%, and Japan’s Nikkei Stock 225 was up by 1.34%. Meanwhile, the ongoing U.S. government shutdown is creating hesitancy in market sentiment and adversely affecting the economy.
Sector Performances
The semiconductor sector faced significant setbacks on Thursday, impacting the broader market negatively, with companies like Advanced Micro Devices and Nvidia falling over 7%. Conversely, Datadog led the upward trend by gaining over 23% after announcing a positive earnings forecast. Meanwhile, companies such as CarMax and DoorDash faced losses of over 25% due to disappointing financial projections.
