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Weekly Updates

Stocks Rally 8% in October, but Fade in Early November Trading

Weekly Update – November 04, 2022

  • The S&P 500 index fell 3.3% last week amid escalating worries over rising interest rates and their impact on the economy.
  • The market benchmark ended Friday’s session at 3,770.55, down from last Friday’s closing level of 3,901.06.
  • While the S&P 500 ended October on Monday with an 8% monthly jump, it is already down 2.6% so far for the new month after just the first four November sessions. It is also down 21% for the year to date.
  • Last week’s tumble came as the Federal Reserve’s Federal Open Market Committee raised its key benchmark rate by another 75 basis points and signaled that rates will be boosted to an ultimate level higher than previously expected as it continues trying to fight inflation. This was a disappointment as investors had been hoping the rate increases so far were working well enough for the FOMC to start talking about a slowdown in rate increases.
  • Adding to investors’ concerns, many companies have been citing macroeconomic challenges when reporting Q3 results and issuing guidance.
  • Friday, jobs data showed a seasonally adjusted 261,000 jobs were added in October, showing some resilience but also indicating some cooling as this represented the smallest monthly gain since December 2020. The unemployment rate edged up to 3.7% from 3.5% in September.
  • Most of the S&P 500’s sectors fell last week. Communication services had the largest percentage drop, down 7.4%, followed by a 6.9% decline in technology and a 5.8% slip in consumer discretionary.
  • Energy led the few sectors that managed to rise week over week. The energy sector climbed 2.4%, followed by a 0.9% increase in materials and a 0.4% rise in industrials.
  • Among the decliners in communication services, shares of Paramount Global (PARA) fell 18% on the week as the film and entertainment company reported weaker-than-expected third-quarter results, citing macroeconomic pressures that weighed on advertising revenue.
  • In the technology sector, Fidelity National Information Services (FIS) reported Q3 adjusted earnings per share a penny below the Street consensus estimate, forecast Q4 results below Street views, and cut its full-year guidance. Shares of the financial services technology company tumbled 29%.
  • In consumer discretionary, Amazon.com (AMZN) shares lost 12% as the retailer said the company is pausing “new incremental hires” for its corporate workforce amid uncertain economic conditions.
  • The energy sector’s gainers, meanwhile, included shares of ConocoPhillips (COP), which rose 4% last week as the company reported Q3 adjusted earnings per share and revenue above year-earlier results as well as analysts’ mean estimates. The energy explorer and producer also boosted its quarterly ordinary dividend by 11% and approved a $20 billion increase to its share-buyback program to $45 billion.
  • Next week’s earnings calendar features companies such as Activision Blizzard (ATVI), Walt Disney (DIS), Occidental Petroleum (OXY), DuPont (DD), D.R. Horton (DHI) and AstraZeneca (AZN).
  • The economic calendar will be light earlier in the week but will get more attention on Thursday, when the consumer price index for October will be released, while Friday will feature an early reading from the University of Michigan on November consumer sentiment.
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