U.S. Manufacturing Hits 55.5% as Jobs, Election and Earnings Fill the Week
Key Facts
The Institute for Supply Management’s U.S. manufacturing index came in at 55.5% in October, up one point from September and extending its expansion to a 10th consecutive month, Axios reported, citing the institute. The reading comes in a week that brings the U.S. federal elections scheduled for November 3, labor-market data, corporate earnings and central-bank meetings. Reuters said the election result could affect fiscal-spending expectations, while investors are watching for the possibility of tighter regulation of artificial intelligence and greater scrutiny of banks and cryptocurrency companies if Democrats win. The jobs report stands out as an indicator that could help investors gauge the Federal Reserve’s next move, as markets price in a roughly 75% chance of a rate hike in December. Technology companies’ results are also expected to test whether investment momentum in AI can continue after a month in which the Nasdaq 100 suffered heavy losses.
The upcoming jobs data offer a mixed picture of the hiring trajectory: analysts surveyed by Reuters expected 65,000 jobs to be added in October, after an increase of 29,000 in September that was below expectations, while the unemployment rate stood at 4.2% the previous month. Barclays estimated, in a forecast published by Kiplinger, that nonfarm payrolls grew by 50,000 in October, following gains of 133,000 in August and 29,000 in September. The Bureau of Labor Statistics is scheduled to release its October report on Friday, November 6, at 8:30 a.m. Eastern time. The September Job Openings and Labor Turnover Survey report is due Tuesday, November 3, at 10:00 a.m. Eastern time; it is separate from the monthly October jobs data. The gap between the estimates of 65,000 and 50,000 puts employment figures at the center of attention, while September’s 29,000 reading is set to serve as the direct comparison for the new report.
On the corporate front, Palantir said its third-quarter results, for the period ended September 30, will be released Monday, November 2, after U.S. markets close, with a webcast to discuss the results at 5 p.m. Eastern time. Markets are also awaiting results from AMD and Qualcomm, which could either reinforce or ease concerns about the momentum of AI investment, Reuters reported. Disappointing results from Alphabet, Amazon and Intel had triggered a sharp drop in their share prices, according to the same report. As of October 30, about half of S&P 500 companies had reported results, while Wall Street expected aggregate earnings to rise 30% during the current reporting season, the Associated Press reported. Kieran Ganesh, a multi-asset strategist at UBS, said volatility is likely to persist during earnings season and that the market may punish companies that fail to meet its expectations.
In markets, S&P 500 futures rose 0.33%, Nasdaq 100 futures gained 0.62% and Dow Jones futures advanced 0.38% ahead of the opening on Monday, November 2, as technology and AI stocks steadied after a weak October, Reuters reported. The Nasdaq 100 lost more than $2.5 trillion in market value during October and came close to entering correction territory amid investor concerns about major technology companies’ AI spending and the lack of clarity on returns. The rest of the week’s agenda includes Sweden’s monetary-policy decision and its November policy update on November 4, as well as Bank of England publications, including the policy summary, Monetary Policy Committee minutes and Monetary Policy Report, on November 5 at noon local time. November 4 is also the date of the U.S. Treasury’s next quarterly refunding announcement. The U.S. jobs report is due on November 6, following the September job-openings report, Sweden’s policy decision and the Bank of England publications.