SVET Reports
SVET Markets Weekly Update (October 30 — November 3, 2023)
Week 44 was the outlandish one for Nasdaq, which has been actively rising on a technical rebound from the 13K support level, reinforced by some traders’ over-optimistic interpretation of Powell’s intentions to end rate hiking sooner than expected. Meanwhile, BTC and ETH were stuck below their key resistance levels of 35K and 1.85K, respectively.
On Monday, Texas business activity declined, but the Nasdaq rose on technicals and ahead of the Fed’s interest rate decision, as well as Apple’s earnings report. Technology, financial, and consumer discretionary stocks led the gains. Large-cap stocks, such as Alphabet, Microsoft, Amazon, and Meta, rose. Tesla and ON Semiconductor shares fell after the companies issued weak outlooks. BTC and ETH continued to consolidate below their key resistance levels at $35K and $1.8K, respectively.
Details
Texas general business activity in manufacturing activity declined for the 18th month in a row, with new orders falling at a faster pace. Output growth slowed, and shipments, wages, and employment growth all slowed as well.
On Tuesday, home prices showed the biggest increase in seven months, while the Nasdaq and other major indexes rose due to technical buying, led by the financial and consumer discretionary sectors. Energy was the biggest laggard. Nvidia fell after reports that it may have to stop chip orders to China. BTC (~34.4K) and ETH (~1.8) were unchanged as bulls consolidate before their next breakout’s attempt.
Details
Case Shiller Home Price Index rose 2.2% in August, the biggest increase in seven months. This was above forecasts. Chicago, New York, and Detroit had the biggest increases, while Las Vegas, Phoenix, and San Francisco had the biggest declines. Home prices have increased for seven straight months. S&P DJI said that the strength of the August report is consistent with an optimistic view of future results.
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.
On Thursday, Nasdaq closed sharply higher, mostly due to “trading volatility” technicals and as some investors cheered weak signs that the labor market is cooling. Several companies also reported strong earnings, including Eli Lilly, Starbucks, and Roku. Crypto buyers attempted to storm BTC’s and ETH’s key resistance zones.
Details
The number of people filing for unemployment benefits increased by 5K to 217K in the week ending October 28th, the highest level in nearly two months. This suggests that the labor market is cooling, despite remaining at historically tight levels.
According to the Challenger report job cuts fell to their lowest level in three months in October, but the tech sector continued to lead all industries in layoffs. Employers have announced plans to cut over 640K jobs this year, the highest number since 2020.
On Friday, the Nasdaq rose after the jobs report showed the labor market cooled more than expected, reinforcing bullish bets that the Fed is done raising interest rates. Real estate, financials, and materials were the top performers, while most of the tech sector struggled, led by a fall in Apple shares after its sales declined for a fourth consecutive quarter. Meanwhile, Bitcoin and Ethereum are still trading below 35K and 1.85K, respectively.
Details
The unemployment rate rose to 3.9% in October 2023, the highest since January 2022. The number of unemployed people increased by 146K to 6.51M, while the number of employed people decreased by 348K to 161.2M.
The economy added 150K jobs in October, below expectations, as several strikes weighed on the manufacturing sector. Job gains were concentrated in healthcare, government, and construction. Payrolls remain well above the number needed to keep up with population growth, but the labor market is showing signs of cooling.
On Week 45, the we will see speeches from Fed officials, the release of consumer sentiment and trade data, and earnings reports from Uber and Walt Disney. China will focus on inflation, new loans, and trade data, while Australia’s central bank will make an interest rate decision. Inflation rates in Brazil, Mexico, the Philippines, and Russia will also be watched. The UK, Philippines, and Indonesia will release GDP data, and Spain, Italy, Brazil, and Canada will share service PMIs. Germany will provide updates on factory orders and industrial production.
Still, trading volatility remains the name of the game for most investors.