Overview:
On Friday, October 4, 2024, U.S. stock markets rallied, with the Dow Jones Industrial Average closing at a record high, rising by 0.81% to finish at 42,352.75. The S&P 500 gained 0.90% to 5,751.07, and the Nasdaq Composite jumped 1.22% to 18,137.85. This strong performance was driven by a better-than-expected jobs report, which reassured investors that the economy remains robust, reducing fears of a slowdown.
The report showed the U.S. added the most jobs in six months in September, and the unemployment rate dropped to 4.1%. While the positive data may slow the pace of Federal Reserve rate cuts, it provided a boost to market sentiment. Traders adjusted their expectations for the Fed’s November meeting, now predicting just an 8% chance of a 50-basis-point rate cut, down from 31% earlier in the day.
Fear & Greed Index:
Greed – Strong job data and optimism about continued economic growth bolstered investor sentiment, easing worries about a potential downturn.
Key Indices (Closed Prices):
- Dow Jones Industrial Average: +0.81% at 42,352.75
- S&P 500: +0.90% at 5,751.07
- Nasdaq Composite: +1.22% at 18,137.85
Sector Performance:
Winners:
- Financials: The S&P 500 financials index surged 1.6%, benefiting from a positive economic outlook and expectations of steady growth.
- Energy: The S&P energy index climbed 1.1% as oil prices rose, driven by Middle East concerns. The energy sector recorded its biggest weekly gain since October 2022, with a 7% increase for the week.
Losers:
- Electric Vehicles: Rivian fell 3.2% after revising its production forecast downward and reporting weaker-than-expected vehicle deliveries for the third quarter.
- Airlines: Spirit Airlines plummeted 24.6% amid reports of potential bankruptcy talks with bondholders.
Key Movers:
- Spirit Airlines (SAVE): Shares plunged 24.6% after reports surfaced of the airline being in discussions with bondholders about a potential bankruptcy filing. In contrast, Frontier Group (ULCC) surged 16.4%, and United Airlines (UAL) and Delta Air Lines (DAL) saw gains of 6.5% and 3.8%, respectively.
- Rivian (RIVN): Dropped 3.2% after the electric vehicle company cut its full-year production forecast and reported disappointing third-quarter deliveries.
- JP Morgan Chase (JPM): Up 1.4%, ahead of next week’s third-quarter earnings reports, which are expected to give further insight into the health of the financial sector.
Economic Data:
- Jobs Report: U.S. employment data showed the economy added more jobs than expected in September, with the unemployment rate falling to 4.1%. This reinforced confidence in the economic outlook for the fourth quarter.
- Federal Reserve Rate Cuts: Following the stronger-than-expected jobs report, traders reduced their bets on a 50-basis-point rate cut at the Federal Reserve’s upcoming November meeting.
Outlook:
Investors are now shifting their focus to third-quarter earnings reports, which are set to begin next week. Major financial institutions, including JP Morgan Chase, Wells Fargo, and BlackRock, will release their results, and bullish investors are hoping the earnings season will justify current stock market valuations. Meanwhile, geopolitical risks in the Middle East and oil prices remain on the radar, with President Joe Biden commenting on potential strategies Israel may consider in response to recent missile attacks.
As the U.S. economy shows resilience, particularly in the labor market, the stock market continues to perform well, with the S&P 500 up 20.6% for the year so far. However, investors remain cautious about inflation, interest rate decisions, and external geopolitical factors.