Image Souce: Krish Capital Pty Ltd

Index Update

The S&P 500 closed sharply lower Thursday as a tech rout led by Meta and Microsoft, combined with hotter inflation data, clouded prospects for deeper Federal Reserve rate cuts. The Dow fell 378 points (0.9%), the S&P 500 dropped 1.9%, and the NASDAQ plummeted 2.8%.

Market Movers

Meta slid over 4% after disappointing user growth and plans for increased spending, while Microsoft fell nearly 6% on weaker guidance despite beating fiscal Q1 estimates. eBay dropped 8% on disappointing holiday forecasts, Robinhood slumped 16% after missing earnings expectations, and Uber fell 9% as growth slowed.

Commodity Update

WTI crude oil futures rose toward $71/barrel on Friday, gaining for the third consecutive session amid escalating tensions in the Middle East, with reports suggesting Iran may attack Israel. Oil prices are also buoyed by expectations that OPEC+ might delay a planned production increase. Meanwhile, gold climbed to nearly $2,760/oz as investors seek safety amid strong US economic data and political uncertainties surrounding a potential Trump presidency. Market attention is focused on today’s nonfarm payrolls report for more insights.

Macro Update

The U.S. economy is expected to add 113K jobs in October 2024, the slowest pace in six months, impacted by Hurricanes Helene and Milton, as well as strikes at Boeing and hotels. The unemployment rate is projected to remain at 4.1%, with wages rising 0.3%. In the UK, house prices rose 2.4% year-on-year, easing from 3.2% in September, but marking the eighth consecutive increase. Meanwhile, China’s Caixin Manufacturing PMI jumped to 50.3, signaling a return to expansion in factory activity, driven by new orders despite declining export orders.

Futures Update

U.S. stock futures indicate a positive start on Wall Street as traders assess earnings from major tech companies ahead of the October nonfarm payrolls report. Apple shares dipped in premarket trading after revealing a cautious outlook, while Amazon's better-than-expected revenue and booming AI demand sent its stock higher. Dow futures rose 54 points, S&P 500 futures added 13 points, and Nasdaq 100 futures increased 77 points. Investors are keenly awaiting today's jobs data, which is expected to show a slowdown in job growth to 106K.

After a sharp decline early in the session, stocks experienced significant weakness throughout the trading day on Thursday. The Nasdaq, in particular, faced a steep drop as technology stocks underwent a sell-off. The major indices continued to decline as the session progressed, closing near their lowest points of the day. The Nasdaq fell 512.78 points, or 2.8%, to finish at 18,095.15, while the S&P 500 dropped 108.22 points, or 1.86%, closing at 5,705.44. From a technical analysis perspective, the S&P 500 broke down from a rising wedge pattern, which we have consistently highlighted in previous trading sessions. Additionally, the 14-period RSI is trending downward following the emergence of a bearish divergence, indicating a potentially negative outlook. Traders should keep an eye on key price levels, with resistance around 5,800 and support near 5,648.

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