weekly market update 11/1/2024

After five straight months of gains, the S&P 500 finished October about 1% lower as investors prepare for next week’s elections and Federal Reserve decision.  However, October is historically a poor month for stocks, particularly during presidential election years, so some seasonal weakness was not surprising.   It was a busy week for third quarter earnings and while some of the mega cap stocks such as Microsoft, Apple, and Meta were unable to meet high expectations, Q3 earnings growth for the S&P 500 is on pace to rise by a solid 5% year-over-year (per FactSet).  The labor market did show signs of weakness, but impacts from the recent hurricanes and labor strikes are difficult to handicap. Obviously, Tuesday’s elections are front of mind for markets, but the Federal Reserve is expected to cut interest rates by another 25 basis points (0.25%) on Thursday, so markets will have plenty of excuses to be volatile next week.

LABOR MARKET UNCERTAINTY

It was a strange week for labor data.  On one hand Friday’s jobs report for October significantly missed expectations with nonfarm payrolls rising only 12K, the lowest monthly jobs gains since December 2020.  Furthermore, the Job Openings and Labor Turnover Survey, or JOLTS, showed the lowest number of job openings since March 2021.  On the other hand, however, weekly jobless claims fell to their lowest levels since May while the payroll company ADP indicated 233K jobs were added in October, the most robust hiring since July 2023.  Consumer confidence for October also increased by the largest margin since March 2021 while views on the availability of jobs rebounded after several months of weakness.  When you add in potential distortions from political uncertainty, hurricanes, and labor strikes (i.e., Boeing) it becomes increasingly difficult to gauge the true state of the labor market.  Next month’s jobs report for November will be particularly interesting as the disruptions we highlighted earlier are hopefully no longer present.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder

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