Week 42 in brief
North America
Stocks on Wall Street closed higher on Friday to finish the week with gains, with all three major indices rising more than 2% for the day and booking their biggest weekly percentage gains since June. This was after signals in the week that the US federal reserve would consider less aggressive inflation-curbing tactics in their oncoming November meeting and beyond.
The week was also marked by earning reports from the major Wall Street companies, soft economic data, and political drama in the UK. Wall Street traders were also coping with intraday volatility in stocks as around $2 trillion in notional value of options on stocks, indexes and exchange-traded funds expired, or were set to expire, on Friday.
How did the major indices perform? On Friday:
- The Dow Jones Industrial Average rose 748.97 points, or 2.47%, to 31,082.56,
- The S&P 500 gained 86.97 points, or 2.37%, to 3,752.75
- The Nasdaq Composite added 244.87 points, or 2.31%, to 10,859.72.
For the week:
- The Dow rose 4.9%,
- The S&P 500 gained 4.7%
- The Nasdaq advanced 5.2%.
What drove the U.S. market?
- A report by the Wall Street Journal on Friday indicated the Fed was planning to go soft on interest rates in the coming months. This was further supported by comments by San Francisco Fed president Mary Daly indicating the same.
- It is still widely expected that the fed will raise interest rates by three-quarters of a percentage point at its policy meeting in early November, but there may be some debate among Fed officials over whether to hike rates by 50 basis points in December.
- Analysts on Wall Street updated their outlook on Friday and priced in a lower probability of a 75 basis-point hike in December, with odds falling to less than 50% from 75% before the report and comments from California’s Fed president.
- Following multiple earnings reports in the week, Investors were analyzing the latest financial statements from companies, searching for signs of strain from high inflation, rising borrowing costs, and challenging economic conditions.
- In individual stock performance, Shares of Snap tumbled 28.1% after the developer of the camera and messaging app Snapchat revealed late on Thursday that revenue growth had slowed and losses had ballooned in the third quarter.
- Shares of Meta and Twitter ended down 1.2% and 4.9%, respectively.
What drove the U.S. market?
- A report by the Wall Street Journal on Friday indicated the Fed was planning to go soft on interest rates in the coming months. This was further supported by comments by San Francisco Fed president Mary Daly indicating the same.
- It is still widely expected that the fed will raise interest rates by three-quarters of a percentage point at its policy meeting in early November, but there may be some debate among Fed officials over whether to hike rates by 50 basis points in December.
- Analysts on Wall Street updated their outlook on Friday and priced in a lower probability of a 75 basis-point hike in December, with odds falling to less than 50% from 75% before the report and comments from California’s Fed president.
- Following multiple earnings reports in the week, Investors were analyzing the latest financial statements from companies, searching for signs of strain from high inflation, rising borrowing costs, and challenging economic conditions.
- In individual stock performance, Shares of Snap tumbled 28.1% after the developer of the camera and messaging app Snapchat revealed late on Thursday that revenue growth had slowed and losses had ballooned in the third quarter.
- Shares of Meta and Twitter ended down 1.2% and 4.9%, respectively.
How did Asian markets perform?
- Stocks in Asia underwent a mixed trading day on Friday as the dollar continued its strong dominance.
- The Asia Dow, which includes blue-chip companies in the region, fell 1.57% to 2,749.5 points on Friday. On a weekly basis, it fell 2.20%.
- Tokyo’s Nikkei 225 stock exchange dropped 0.43% to 26,890.58. The index was down 0.74% this week.
- Japan’s core consumer prices surged 3% in September, the sharpest gain in over 31 years, as weaker yen pushed import costs up, government data showed Friday.
- The Hang Seng, the benchmark for blue-chip stocks trading on the Hong Kong stock exchange, went down by 0.42%, to 16,211.12, while it had a weekly decline of 2.27% on Friday.
- China’s Shanghai stock exchange was on a high note, rising 0.13% from the previous close to 3,038.93 points on Friday, while it was down 1.08% on a weekly basis.
- Indian Sensex benchmark increased 0.18%, to 59,307.15 and Singapore index benchmark lost 1.75%, to 2,969.95.
- While Singapore was down 2.29% this week, Sensex rose 2.39%.
Bonds and Commodities
- US yields eased on Friday with news of a potential slowdown on interest rate hikes by the fed in December. The Benchmark 10-year notes last rose 2/32 in price to yield 4.2209%, from 4.226% late on Thursday. The 10-year treasury yield touched its highest level since 2007 this week. The 30-year bond last fell 56/32 in price to yield 4.3369%, from 4.215% late on Thursday.
- In the wake of a strong Oil demand from China, oil prices advanced on Friday. U.S. crude rose 0.64% to settle at $85.05 per barrel, while Brent settled at $93.50 per barrel, up 1.21% on the day.
- Gold prices rebounded in response to the weaker dollar.
- Spot gold added 1.6% to $1,654.16 an ounce.
Currencies
- The greenback tumbled against a basket of world currencies. The dollar’s tumble against the Yen led analysts to speculate on a possible intervention by Japan to halt the Japanese currency’s slide.
- The Japanese yen strengthened 1.94% versus the greenback to 147.30 per dollar, while the Sterling was last trading at $1.1304, up 0.63% on the day.
- The dollar index fell 0.9%, with the euro up 0.77% to $0.9858.
Next week
Next week could be the busiest of this corporate earnings season. Investors can expect results from some of the world’s largest multinational companies, including tech giants Microsoft and Apple.
The week will also bring a wide array of economic updates, including the advance estimate for third-quarter gross domestic product (GDP) growth. Further updates on the housing market are expected, including August home prices and September new and pending home sales.
Updates on consumer confidence will arrive with the Conference Board’s Consumer Confidence Index (CCI) on Tuesday, along with the University of Michigan’s Consumer Sentiment Index (MCSI) on Friday.