Economic Update
In October, the U.S. labor market saw its weakest growth since December 2020, with non-farm payrolls increasing by only 12,000, far below the 113,000 predicted by economists. This decline is attributed to the impact of hurricanes hitting the southern coast and widespread industrial actions, including a significant strike at Boeing. Revisions lowered September’s job growth to 223,000 and August’s to 78,000. The unemployment rate remained steady at 4.1%.
Presidential Election
With the presidential election just days away, Vice President Kamala Harris and former President Donald Trump are intensifying their campaigns in key battleground states. Both candidates are focusing on states like Wisconsin, Georgia, and Pennsylvania, which are expected to play pivotal roles in determining the election outcome. Recent polls indicate a tight race, with Harris holding a narrow lead in some national surveys. However, the electoral college outcome remains uncertain, emphasizing the importance of voter turnout in these critical regions.
Stock Market Trends
The stock market has experienced volatility ahead of the election. Major indexes like the Nasdaq and S&P 500 faced declines, influenced by weak earnings reactions from major tech companies and rising Treasury yields. Pre-election concerns and a weak jobs report may have also played a role. Many companies reported their earnings, resulting in mixed market reactions. Apple (AAPL), for example, saw a drop in share prices despite beating estimates due to weak future sales growth forecasts. Amazon (AMZN) and Microsoft (MSFT) also faced declines following their earnings reports. However, companies like Google (GOOGL) and Meta Platforms (META) showed gains with strong earnings and positive contributions from AI investments.
Implications for Investors
The combination of sluggish job growth, election uncertainties, and stock market fluctuations presents a complex landscape for investors. The Federal Reserve is expected to cut interest rates by 25 basis points after the election, with traders rating the probability at 95%. Concerns about inflation under a potential Trump administration influence the Fed’s cautious approach. While the dollar fell and bond yields dropped, experts like Fitch Ratings’ Brian Coulton suggest that the broader consumer strength may lead the Fed to underweight the low jobs growth.
As the nation approaches Election Day, the interplay between economic indicators, political developments, and market dynamics will continue to shape the investment environment. Investors should remain vigilant, monitor unfolding events, and consider diversifying their portfolios to navigate potential risks and opportunities.