{"id":198636,"date":"2023-11-03T13:04:35","date_gmt":"2023-11-03T17:04:35","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=198636"},"modified":"2023-11-03T15:41:38","modified_gmt":"2023-11-03T19:41:38","slug":"bulls-sweep-first-week-of-november-nov-3-2023","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/bulls-sweep-first-week-of-november-nov-3-2023\/","title":{"rendered":"Bulls Sweep First Week of November: Nov. 3, 2023"},"content":{"rendered":"\n

Stocks are having their best week of the year as a plethora of major economic developments went in favor of the bulls. A week of bullish news for market players wrapped up this morning with lighter-than-expected job market data creating a strong boost in market sentiment. <\/p>\n\n\n\n

A Week of Encouraging Data<\/strong><\/h2>\n\n\n\n

Data on Tuesday showed an easing of inflation in the eurozone. On Wednesday, weaker-than-expected U.S. ISM-Manufacturing and ADP payroll reports pointed to a further easing of inflationary pressures. Additionally, Federal Reserve Chairman Jerome Powell\u2019s presentation on the same day was interpreted by investors as dovish. Investors\u2019 enthusiasm received another boost yesterday with data depicting productivity gains and increases in initial and continuing unemployment claims, which in total portray additional easing of inflationary pressures. After enduring three months of consecutive equity losses, this morning\u2019s news that newly created jobs missed expectations by 30,000 alongside another miss on ISM-Services is empowering bulls who are seeking to preserve this year\u2019s market rally and maybe even add to it.<\/p>\n\n\n\n

Hiring Slows in October<\/strong><\/h2>\n\n\n\n

Employers added 150,000 jobs last month, according to this morning\u2019s Employment Situation Summary from the U.S. Bureau of Labor Statistics. Analysts had expected jobs to increase by 180,000. Additionally, job growth slowed from September\u2019s downwardly revised 297,000. While 150,000 new jobs would normally be considered strong job growth, this morning\u2019s report offered plenty of weakness under the surface. First, almost all of the net gains were attributed to the non-cyclical education, health services and government sectors, which added 140,000. Second, five of the fourteen sectors lost jobs during the period. Third, the labor force participation rate and the pace of wage gains declined while the unemployment rate ticked up.<\/p>\n\n\n\n

Non-Cyclical Employers Lead<\/strong><\/h2>\n\n\n\n

Job gains were dominated by the private education and health services category and the government sector which added 89,000 and 51,000, respectively. Construction also contributed to job creation with 23,000 new positions. Other gains occurred in the leisure and hospitality category, which added 19,000 positions and professional and business services, which added 15,000 positions. Wholesale trade, mining and logging, retail trade, and utilities each added below 10,000 jobs. Leading the job losses were the manufacturing, transportation and warehousing, information, finance and other services sectors which reduced headcounts by 35,000, 12,000, 9,000, 2,000 and 1,000.  <\/p>\n\n\n\n

Wage Increases Slow<\/strong><\/h2>\n\n\n\n

Easing labor demand led to wage gains slowing to 0.2% month-over-month (m\/m) a deceleration from the 0.3% reported for September. Indeed, wage gains decelerated to the slowest pace since February 2022. Meanwhile, some folks appeared to stop looking for jobs and stayed home, as 201,000 people left the labor force. It\u2019s unclear if those individuals were primarily discouraged about potential wages or if they were unable to find work due to mismatches in their skills and the skills employers need. The slowdown in hiring amidst a reduced labor force caused the unemployment rate to hit 3.9%, higher than expectations calling for an unchanged m\/m reading of 3.8%.<\/p>\n\n\n

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\"Wage<\/figure>\n<\/div>\n\n\n

U.S. Services Sector Slows<\/strong><\/h2>\n\n\n\n

In another sign of easing economic activity, the growth in the U.S. services sector slowed last month with the Institute for Supply Management\u2019s (ISM) Purchasing Managers\u2019 Index for services weakening to 51.8 from September\u2019s 53.6 level. Economists expected a number closer to 53. Servicers are attempting to do more with less, as employment declined sharply to 50.2 from 53.4 while new orders and backlogged orders grew from 51.8 and 48.6 to 55.5 and 50.9. Perhaps most concerning, however, was the 58.6 figure on prices, which only slowed marginally from 58.9, pointing to persistent services sector inflation. The good news, however, is that goods and commodity inflation appear to be well contained at the moment.<\/p>\n\n\n\n

Canada\u2019s Job Market Also Weakens<\/strong><\/h2>\n\n\n\n

North of the U.S. border, jobs also came in below estimates. Canadian job growth totaled 17,500 in October, weaker than the 22,500 estimate and September\u2019s 63,800. In a sign of weakness under the surface, the private sector lost 1,400 jobs while the public sector added 18,900. Also, job growth was entirely carried by part-timers, with full-time employment declining by 3,300 while part-time employment grew 20,800.<\/p>\n\n\n\n

Easing Fears of Hawkish Fed Drive Strong Market Gains<\/strong><\/h2>\n\n\n\n

Markets are soaring today with all major U.S. equity indices higher while bond yields and the dollar tumble as financial conditions loosen. The small-cap Russell 2000 Index is leading with a 2.6% gain while the S&P 500, Nasdaq Composite and Dow Jones Industrial indices are up 0.7%, 0.7% and 0.5%, respectively. Bond yields are tumbling across the Treasury curve, with the 2- and 10-year maturities down 13 and 14 basis points (bps) to 4.86% and 4.53%. Lower yields and lighter Fed tightening expectations are pushing down the dollar, with the greenback\u2019s index down 92 bps to 105.19. The Federal Reserve\u2019s currency is down against the euro, pound sterling, franc, yen, yuan and Aussie and Canadian dollars. Crude oil is lower on the session as traders focus on weaker demand conditions while dialing down risks of a wider Middle East conflict. The weaker greenback is also hurting the commodity which is dollar denominated. WTI crude oil is down 0.6% or $0.49 per barrel to $81.96. <\/p>\n\n\n\n

Streaming and Traveling Shine as Global Trade Contracts<\/strong><\/h2>\n\n\n\n

Consumer spending on services, such as streaming entertainment and traveling remains strong, while international trade is weakening as the global economy slows, as illustrated by the following examples:<\/p>\n\n\n\n