Market Overview
On Friday, the S&P 500 Index ($SPX) and the Dow Jones Industrial Average ($DOWI) closed higher, up +0.13% and +0.16% respectively. Meanwhile, the Nasdaq 100 Index ($IUXX) saw a decline of -0.28%. December E-mini S&P futures (ESZ25) increased by +0.14%, whereas December E-mini Nasdaq futures (NQZ25) fell by -0.22%.
Market Sentiment
U.S. stock indices rebounded from early losses on Friday and concluded the day mixed. This turnaround was largely attributed to Senate Democrats moderating their demands for reopening the government, now only asking for a one-year extension on expired health care subsidies. However, Republicans dismissed this proposal, stating negotiations on health care tax credits would only proceed if government reopening was agreed upon. The exchange of offers between the two parties was perceived as a positive sign towards resolving the government shutdown, resulting in a stock market recovery.
Economic Concerns
Initially, on Friday, stock indices saw declines, with the S&P 500, Dow Jones, and Nasdaq dropping to new two-week lows. The underperformance of semiconductor manufacturers contributed to this broader market weakness. Economic anxieties increased following a report from Challenger, Gray & Christmas indicating the highest number of job cuts announced in October in over two decades. Additionally, the University of Michigan’s consumer sentiment index for November also saw a steeper-than-expected decline, reaching a low not seen in nearly 3.5 years.
Federal Reserve Commentary
Comments from Federal Reserve Vice Chair Philip Jefferson added to market apprehensions. His remarks indicated that current interest rates are still exerting a “somewhat restrictive” effect on the economy, suggesting a cautious approach to rate cuts as they approach neutral levels.
International Trade News
U.S. consumer credit for September rose by +$13.093 billion, exceeding expectations of +$10.230 billion. However, trade data from China raised concerns, showing a surprising -1.1% annual decline in October exports versus predictions of +2.9%, marking the largest drop in eight months. Imports also experienced a modest increase of +1.0% year-on-year, trailing projections of +2.7%.
Corporate Earnings
During this week, the Q3 corporate earnings season gained momentum, with 136 S&P 500 companies reporting their earnings. Bloomberg Intelligence noted that 81% of these companies exceeded expectations, setting the stage for one of the best quarterly results since 2021. However, Q3 profits were forecasted to rise by just +7.2% year-on-year, marking the smallest increase in two years.
Global Market Trends
International markets registered declines on Friday. The Euro Stoxx 50 fell to a three-week low, finishing down -0.80%, while China’s Shanghai Composite dropped -0.25% after reaching a one-week high. Japan’s Nikkei Stock 225 also closed down -1.19%.
