US Stocks defied earrings weakness, bouncing off the lows seen earlier in the week, primarily led by Apple, despite Amazon, Alphabet, Microsoft, and Meta Platformsposting large declines. Furthermore, strong earnings from Visa, Pepsi, and McDonald’s also helped bulls turn the tide overbear.
Markets also saw a boost from the reported Gross Domestic Product (GDP) numbers,which saw the US GDP grow by 2.6%, beating estimates of 2.3%, and snapping two-quarters of negative growth, and subsequently easing recession fears.
For the week, the Dow Jones rose in six consecutive trading sessions to end the week at nearly 6% higher, while the S&P 500 rose 4% and the Nasdaq climbed 2%.
The week ahead was packed with a key FOMC meeting and nonfarm payrolls, which could determine where markets could be headed next.
FOMC Meeting
Federal Reserve Policymakers will meet for the November Federal Open Market Committee (FOMC) on Tuesday and Wednesday. Market Consensus estimates show that the US Central Bank will widely raise rates by another 75 basis points, bringing benchmark rates to the target range of between 3.75%-4%.
The Fed has raised rates at an unprecedented rate, with interest rates being hiked by a cumulative 300bps since March to combat four-decade-high inflation. Investors are now projecting interest rates to be close to 4.5% and will look towards the ‘Fed Pivot’ when central bankers decide to slow the pace of hikes in the coming months.
Jobs Report
A String of job reports is set to be released in the week ahead. This includes the Job Openings and Labor Turnover Survey (JOLTS), which will be reported by the Bureau of Labor Statistics for the month of September, tracking the number of job openings, new hires, and quits.
The JOLTS survey has seen a sharp drop in recent months,falling from 11.85 million in March to 10.05 million in August, as recession fears and highinflationhave weighed in on hiring.
Nonfarm Payrolls Monthly Gains, Source —Trading Economics
On Friday, investors will look toward the Nonfarm payrolls report for October, with consensus forecasts showing the US economy adding 220,000 jobs, which is slightly lower than the 263,000 seen in September. Unemployment is expected to rise as a result, from 3.5% to 3.6%, which is one of the signals that central bankers are looking to when making their policy decision.
Technical Indicators
S&P 500 1-Year Return, Source:TradingView
The S&P 500 is now down 15.12% over the past year. The fear and greed index stands at 61, which indicates that investors may be buying based on greed.
1-Week Relative Performance, Source —Finviz
The three best-performing sectors for the week were Real Estate, Utilities, and Consumer Defensive. Base Materials, Consumer Cyclicals and Communication Services underperformed the market .
Bottom Line
Market indiceshave continued to remain resilient with a few strong earnings from Apple, Mcdonald’s, and Pepsi, coupled with positive data holding up the market, despite earnings disappointment throughout.
The week ahead is packed with key events and data releases, including the FOMC meeting and jobs report, which will help guide investors about where markets could be headed next.
In recent weeks, markets have continued to drop due to higher inflation and a weakening economy. Key corporate earnings and housing market updates will clearly depict where indices could be headed next.
$S&P 500(.SPX)$ $NASDAQ(.IXIC)$ $DJIA(.DJI)$ $Pepsi(PEP)$ $McDonald's(MCD)$ $Apple(AAPL)$
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