The Stock Market This Week: November 2-6
The Stock Market This Week: November 2-6
By: Stacey Nickens
- Earnings Reports
- Clorox beat revenue expectations and increased their 2021 revenue guidance.
- Qualcomm posted strong earnings and positive guidance.
- Economic News
- The ISM Manufacturing Index for October clocked in at 59.3%, the highest level since September 2018. New orders reached 67.9%, their highest level since January 2004, and demonstrated that the manufacturing sector continues to recover rapidly.
- Construction spending rose 0.3% m/m in September, largely helped by rising residential construction spending.
- Factory orders increased 1.1% m/m in September, showing that businesses continue to ramp up spending.
- The ISM Non-Manufacturing Index clocked in at 56.6%, slightly lower than September’s reading of 57.8%. The index reading suggests that manufacturing activity continues to expand but at a slower pace.
- September’s trade deficit narrowed as export growth outpaced import growth. Global trade activity continues to show signs of recovery; however, both exports and imports decreased on a year-to-date basis, pointing to the ongoing impact the pandemic has on trading.
- The ADP Employment Change Report for October calculated that 365,000 private-sector jobs were added, a lower reading than was expected.
- Initial jobless claims for the week ending in October 31 dropped by 7,000 to 751,000.
- Productivity rose in the third quarter at a seasonally adjusted rate of 4.9%. Unit labor costs also declined 8.9%.
- Economists predicted a 7.7% unemployment rate for October; however, October’s unemployment rate clocked in at a much better 6.9%.
On Monday, the S&P 500 rose 1.2% as investors bought into the dip from last week and showed renewed confidence in cyclical stocks. The ISM Manufacturing Index for October clocked in at 59.3%, the highest level since September 2018. New orders reached 67.9%, their highest level since January 2004, and demonstrated that the manufacturing sector continues to recover rapidly. This economic news helped cyclical stocks, and by market close, the energy, materials, industrial, and financial sectors finished in the positive. However, mega-cap and growth stocks continued to struggle, and the Nasdaq only gained 0.4%. The Dow Jones climbed 1.6%. In other economic news, construction spending rose 0.3% m/m in September, largely helped by rising residential construction spending. In company news, Clorox beat revenue expectations and increased their 2021 revenue guidance.
On Tuesday, major indexes rose as investors continued to operate with a buy-the-dip mindset. The S&P 500 rose 1.8%, with 10 of its 11 sectors finishing in positive territory. The financials, industrials, and consumer discretionary sectors posted the strongest gains. The energy sector was the only one to finish in negative territory. The Nasdaq climbed 1.9%, and the Dow Jones added 2.9%. The market seemed further bolstered by the possibility of knowing election results by tonight or tomorrow morning. In individual company news, Paypal, Skyworks, and Arista Networks all exceeded earnings expectations. Factory orders increased 1.1% m/m in September, showing that businesses continue to ramp up spending.
On Wednesday, mega-cap and growth stocks led the charge. With the likelihood of a divided Congress increasing, investors seemed to bet on the possibility of a delayed and smaller-than-expected stimulus package. Such a package would suggest a slower economic recovery, during which growth stocks would likely outperform cyclicals. Accordingly, the S&P 500 rose 2.2%, with healthcare, communication services, information technology, and consumer discretionary posting the largest gains. Comparatively, the materials, utilities, financials, and industrial sectors fell. The Nasdaq climbed 3.9% with the help of mega-cap stocks, and the Dow Jones was up 1.3%. Both Uber and Lyft performed strongly in daily trading after California voted to classify drivers as contractors instead of employees. Biogen stock also rose after the FDA positively reported on their Alzheimer’s drug. We received a variety of economic reports. The ISM Non-Manufacturing Index clocked in at 56.6%, slightly lower than September’s reading of 57.8%. The index reading suggests that manufacturing activity continues to expand but at a slower pace. September’s trade deficit narrowed as export growth outpaced import growth. Global trade activity continues to show signs of recovery; however, both exports and imports decreased on a year-to-date basis, pointing to the ongoing impact the pandemic has on trading. Finally, the ADP Employment Change Report for October calculated that 365,000 private-sector jobs were added, a lower reading than was expected.
On Thursday, major indexes continued their gains from earlier in the week. The S&P 500 rose 2%. Ten of its 11 sectors finished in positive territory, with energy being the only exception. The materials sector saw the largest gains of the day. With upward momentum among both value and growth stocks, the Nasdaq added 2.6%, and the Dow Jones climbed 2%. In economic news, initial jobless claims for the week ending in October 31 dropped by 7,000 to 751,000. Productivity rose in the third quarter at a seasonally adjusted rate of 4.9%. Unit labor costs also declined 8.9%. This reports suggests continuing improvements in the labor market; however, elevated jobless claims point to significant room for improvement. Of the companies that reported on Thursday, Qualcomm posted strong earnings and positive guidance.
On Friday, major indexes remained relatively flat; however, they still logged some of their best weekly gains since April. The S&P 500 fell 0.03% in daily trading but logged a weekly gain of 7.3%. The Dow Jones fell 0.24% on Friday while adding 6.9% over the course of the week. Finally, the Nasdaq climbed 0.04% during the day and 9% during the week. The market seemed largely bolstered by a strengthening labor market coupled with the possibility of knowing the election outcome sooner than expected. Former Vice President Joe Biden seemed to be prevailing as of Friday afternoon; however, a number of states had yet to make an official call. Many investors had made bearish calls prior to the election but seemed to reverse those calls this week. The possibility of a divided Congress also seemed to contribute to some optimism. Additionally, economists predicted a 7.7% unemployment rate for October; however, October’s unemployment rate clocked in at a much better 6.9%.