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Stock Market News for November 4, 2024: A Day of Mixed Signals and Tech Triumphs
As the stock market closed on Friday, November 4, 2024, investors were greeted with a mix of positive and cautionary signals. Despite weak jobs data, the market managed to end the day on a high note, driven largely by robust earnings reports from tech giants.
Market Benchmarks: A Positive Note to Begin November
The Dow Jones Industrial Average ($DJI) surged 0.7%, or 288.73 points, to close at 42,052.19 points. This significant gain marked a strong start to November, following a somewhat lackluster October. The S&P 500 advanced 0.4%, or 23.35 points, to finish at 5,728.80 points, with consumer discretionary and technology stocks leading the charge.
The tech-heavy Nasdaq added 0.8%, or 144.77 points, to end at 18,239.92 points. This rally was not unexpected, given the stellar performance of tech stocks, particularly after Amazon's impressive earnings report.
Tech Stocks Rally: Amazon Leads the Charge
Amazon.com, Inc. ($AMZN) was the star of the day, reporting third-quarter 2024 earnings that far exceeded expectations. The company posted earnings of $1.43 per share, surpassing the Zacks Consensus Estimate of $1.14 per share. Revenues for the quarter ended September 2024 stood at $158.88 billion, beating the Zacks Consensus Estimate by 1.15%.
This robust performance sent Amazon's shares soaring 6.2% on Friday. The ripple effect was immediate, with other tech stocks also seeing significant gains. Microsoft Corporation ($MSFT) shares rose 1%, while CrowdStrike Holdings, Inc. ($CRWD) jumped 2.1%.
Sector Performance: Winners and Losers
The Consumer Discretionary Select Sector SPDR ($XLY) rose 1.6%, and the Technology Select Sector SPDR ($XLK) gained 0.8%. These sectors were the biggest gainers of the day, reflecting the broader market's optimism in consumer spending and technological advancements.
However, not all sectors shared in the joy. The Utilities Select Sector SPDR ($XLU) declined 2.2%, highlighting the sector's sensitivity to interest rate changes and economic conditions.
Economic Data: Jobs Report Raises Concerns
While the market celebrated tech's triumph, the jobs report for October painted a less rosy picture. The U.S. economy added only 12,000 jobs in October, far below the consensus estimate of 113,000. This was the weakest level of job creation since December 2020.
Several factors contributed to this weak showing, including the impact of two major hurricanes and a workers’ strike at The Boeing Company ($BA). Despite these challenges, the unemployment rate remained steady at 4.1%, aligning with estimates. Wages also saw a solid 0.4% monthly increase, though this was likely influenced by weather-related factors.
Volatility and Market Sentiment
The fear-gauge CBOE Volatility Index ($VIX) was down 5.53% to 21.88, indicating a slight reduction in market anxiety. However, decliners outnumbered advancers on the NYSE by a 1.21-to-1 ratio, suggesting that while the major indexes were up, the broader market was more mixed. A total of 12.13 billion shares were traded on Friday, higher than the last 20-session average of 11.71 billion.
Economic Momentum: A Solid Foundation
Despite the weak jobs report, the overall economic momentum remains solid. The U.S. economy expanded at a 2.8% annualized rate in the third quarter, marking the second consecutive quarter of above-trend growth. Consumer spending continued to drive the economy forward, rising 3.7%, while government spending also showed strength. Business spending, though modest at 0.3%, was a positive sign, albeit with residential investment acting as a drag.
Earnings Season: Expectations and Projections
The third-quarter 2024 earnings season is underway, and analysts are expecting pro forma earnings per share (EPS) of $61.14, representing a 3.8% year-over-year growth and a 1.0% quarter-over-quarter growth. Growth sectors like information technology and communication services are projected to deliver double-digit earnings growth. However, cyclical value sectors are expected to see earnings fall.
Interest Rates and Federal Reserve Policy
The Federal Reserve's policy meeting later this week is highly anticipated, with expectations of another quarter percentage point rate cut. The Fed's September meeting saw a 50bps cut in the federal funds rate to a range of 4.75% to 5.00%, and Chair Powell indicated a cautiously upbeat tone on the economy while acknowledging labor market risks. Future rate cuts are likely to be more gradual, barring a significant economic slowdown.
Geopolitical and Election Risks
Geopolitical tensions and the upcoming U.S. presidential election on November 5 are expected to heighten market volatility. Investors are cautious about the potential impact of election outcomes on economic policies and market stability. A divided government could result in more moderate policies, which might be viewed positively by the market.
Investment Themes and Outlook
Fixed income offers attractive levels of income and protection against an economic downturn, making it a viable option for investors seeking stability. Broadening profit growth is expected to continue supporting a more inclusive stock market rally. International markets, particularly those with strong structural and cyclical tailwinds, are also poised for growth.
In conclusion, the stock market's performance on November 4, 2024, was a testament to the resilience and adaptability of investors. Despite weak jobs data, the market rallied behind strong tech earnings, highlighting the sector's continued influence on market sentiment. As we move forward, investors will be closely watching the Federal Reserve's policy decisions, the outcome of the U.S. presidential election, and the broader economic indicators to navigate the complexities of the market.
The coming weeks will be pivotal, with earnings reports from key companies, central bank decisions, and geopolitical events all set to shape the market's trajectory. For now, the tech sector's strength and the overall economic momentum provide a solid foundation, but investors must remain vigilant and adaptable in these volatile times.
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