Friday’s session on Wall Street brought a continuation of solid growth. It was the best week since October 2022 for US stock markets. The focus of investors’ attention was Wednesday’s Fed decision on interest rates, the latest data from the American economy and quarterly results of companies.
The Dow Jones Industrial was up 0.66% at closing. and amounted to 34,061.32 points. The S&P 500 increased by 0.94% at the end of the day. and amounted to 4358.34 points. For the first time since June, the index recorded five consecutive days of growth.
The Nasdaq Composite gained 1.38%. and closed the session at 13,478.28 points.
During the week, the Dow gained over 5%, the S&P 500 increased by over 6% this week, and the Nasdaq also recorded a similar increase.
Fed and data from the US
The improvement in investor sentiment is the result of expectations that the Fed is close to ending the cycle of interest rate increases. Markets are assessing the latest labor market data USA.
The number of new jobs in non-farm sectors in the United States increased by 150,000 in October. An increase of PLN 180,000 was expected. A month earlier, the increase amounted to 297 thousand, after correction from 336 thousand.
Unemployment rate in the USA it was 3.9%, expected 3.8%. compared to 3.8 percent a month earlier. Hourly wages increased by 4.1%. y/y, and m/m by 0.2%. vs. consensus 4 percent and 0.3 percent
– Worse-than-expected but not too weak US employment data in October increased investor confidence that US interest rates were on target and American economy will be able to make a soft landing, said Nick Brooks, director of economic and investment research at ICG.
On Wednesday, the Fed left interest rates unchanged. in the USA unchanged at 5.25-5.50 percent. The Fed said in a statement that additional tightening of monetary policy would depend on macro data.
– Markets take the US central bank’s second consecutive pause as a clear indication that the Fed will no longer raise rates, and bond yields suggest that the first rate cut will occur in mid-2024. However, I think we should remain cautious. The Fed has not made a clear commitment to a particular course of action, and certainly not to one interest rate cuts within eight months. Inflation is far from defeated. While this is no longer a base case scenario, it is not and should not be completely inconceivable that the Fed will raise interest rates again, allowing short-term bond yields to rebound, said George Lagarias, chief economist at Mazars Wealth Management.
“It’s important to pay attention to corporate earnings because they are a factor in providing the right economic conditions for the Fed to cut rates. This earnings season is exposing cracks in the economy as we see more companies falling short of expectations. This could indicate the slowdown the Fed needs to control the macro environment,” wrote Lewis Grant, senior portfolio manager for global equities at Federated Hermes, in the report.
Company results for the third quarter
Investors are analyzing the results for the third quarter of 2023.
Apple shares fell by less than 1 percent at the end of the day. after the company signaled that the company may not return to growth in the holiday quarter. Apple did not provide a formal forecast for the next quarter.
Apple reported better-than-expected results for the fourth quarter of the 2022/23 fiscal year, but sales are falling for the fourth quarter in a row compared to the previous year.
Block gained over 10%. thanks to better-than-expected results for the third quarter and an increase in full-year forecasts.
Paramount Global rose 15%. Financial results for the third quarter were better than expected.
“We are approaching another phase transition from boom to crisis”
Peter Berezin, chief global strategist at BCA Research, indicated that although shares are expected to rise at the end of 2023, this momentum will be short-lived. – We are approaching another phase transition from boom to crisis. Investors should underweight stocks and overweight bonds over a 12-month horizon. Stock markets will rise at the end of the year but will fall again in 2024 as a global recession begins, he said.
ECB board member Isabel Schnabel said the central bank is on track to reduce inflation to 2%. until 2025, but the last stage of disinflation may be the most difficult, so the bank cannot yet rule out further interest rate increases.
The ISM index of activity in services in the US in October fell to 51.8 points. with 53.6 points in the previous. Analysts expected the index to reach 53 points.
The PMI index, determining the economic situation in the American service sector, prepared by S&P Global, amounted to 50.6 points in October. compared to 50.1 points in the previous month – given in the second calculation. The initial estimate was 50.9 points.
The PMI composite index in the USA, prepared by S&P Global, amounted to 50.7 points in October. compared to 50.2 points in the previous month – given in the second calculation. The initial estimate was 51 points.
On the oil market, WTI contracts for December are priced at $81.02 per barrel, down 1.75%, and January Brent futures are down 1.78%. to $85.30 per barrel.
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