Wednesday's Markets Update (November 1, 2023)

01 Nov 2023 by rate3

On Wednesday, the Fed kept interest rates at 5.5%, as expected. At the same time, the ISM PMI dropped while jobs increased, highlighting the confusing dichotomy in economic data. Nasdaq rallied on Powell's comments, which some bewildered investors saw as shifting to a "dovish" side, again. Meanwhile, BTC and ETH bulls were still assaulting the 35K and 1.85K resistance zones.

Details

The Fed kept interest rates at their highest level of 5.25%-5.5% in 22 years, reflecting their dual focus on controlling inflation and avoiding a recession. They will continue to raise rates based on the economy and financial markets. Economic activity grew strongly in the third quarter, and the labor market remains strong, but inflation is still high. The Fed warned that tighter financial conditions would hit the economy.

The ISM PMI dropped to 46.7 in October marking the manufacturing sector's contraction for the 11th consecutive month, as new orders and production slowed. This is due to higher borrowing costs from the Fed and lower demand from domestic and foreign markets. As a result, employment contracted and input prices fell.

The job market remains strong, with job openings increasing to 9.55 million in September, the highest level in four months. The growth was led by the accommodation and food services and arts, entertainment, and recreation sectors. However, job openings declined in other services, the federal government, and information. Regionally, job openings rose in the South and Northeast, but declined in the West and Midwest.