Overview
On November 1, 2024, U.S. stock markets saw gains, with a significant boost from Amazon, whose stellar earnings exceeded expectations and lifted the Consumer Discretionary sector to a two-year high. Amazon reported strong sales, driven by solid demand in its core retail business and robust growth in cloud services, sending its shares up 6.2%. This positive performance in consumer discretionary stocks helped offset broader economic concerns, particularly around job growth. Despite lower-than-expected October job numbers, which revealed only 12,000 new jobs due to disruptions from recent hurricanes and strikes, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all closed higher.
The weak job growth data, which missed the forecast of 113,000, underscored an economic cooling but was balanced by the unemployment rate holding steady at 4.1%. This steady unemployment figure, alongside a resilient consumer spending pattern, has reassured some investors that the labor market remains fundamentally sound despite the October slowdown. In other sectors, Intel rose 7.8% after providing an optimistic revenue outlook, boosting the tech sector, while Chevron advanced 2.8% on better-than-expected profits linked to increased oil production, driving gains in the Energy sector.
Fear & Greed Index
Neutral – Despite weak job data, optimism from strong earnings kept investor sentiment balanced.
Sector Performance
- Winners:
- Consumer Discretionary: Boosted by Amazon’s strong results, the sector rose 2.4%, marking its highest level in over two years.
- Energy: Chevron gained 2.8% after surpassing profit expectations, supported by increased oil output.
- Losers:
- Utilities and Real Estate: Both sectors faced declines as investors shifted to growth-oriented sectors amid favorable earnings.
Key Movers
- Amazon (AMZN): Jumped 6.2% after strong earnings, lifting the consumer discretionary sector.
- Apple (AAPL): Fell 1.2% due to declining sales in China, raising concerns about growth in the region.
- Intel (INTC): Rose 7.8% following an optimistic revenue forecast, helping to push the chip sector higher.
- Chevron (CVX): Increased 2.8% after reporting better-than-expected Q3 profits, benefiting from higher oil production.
Economic Data
- Job Growth: October nonfarm payrolls showed only 12,000 new jobs added, far below estimates, as hurricanes and strikes impacted hiring.
- Unemployment Rate: Held steady at 4.1%, indicating stability despite slower job growth.
Outlook
As markets look toward the upcoming November 5 presidential election and an anticipated Federal Reserve rate cut expected within the month, investor sentiment remains cautiously optimistic but aware of potential economic headwinds. The recent job growth slowdown has added fuel to expectations that the Federal Reserve will reduce interest rates by 25 basis points, a move aimed at bolstering economic activity amid signs of cooling. Many investors are viewing the expected rate cut as a favorable catalyst for growth-oriented sectors, particularly technology and consumer discretionary, both of which have seen strong performances driven by earnings.
The coming weeks are expected to bring increased volatility, with the election outcome likely to influence economic policies and potentially add layers of market uncertainty. Additionally, the ongoing earnings season has shown mixed results, with strength in some sectors—such as consumer discretionary, driven by Amazon, and energy—offsetting weaknesses in areas like utilities and real estate, which are more sensitive to interest rate fluctuations. Investors are likely to keep a close watch on sectors tied to consumer spending and technology, as both sectors are showing resilience despite broader economic pressures.