Market Update

The stock market experienced its second decline this week, with the S&P index falling by 1.02% and the NASDAQ index dropping by 1.76%. This follows a similar pattern on Tuesday, where the S&P index fell by 1.17% and the NASDAQ index fell by 2.04%. The markets rebounded slightly on Wednesday, but the overall trend for the week has been downward.

Big Losers

Some of the biggest losers in the market included Palantir, which has fallen by 15.51% since announcing its earnings earlier this week. Meta also experienced a significant decline, falling by 2.67% and bringing its total decline since last week’s earnings to 17.78%. Nvidia and AMD also saw significant drops, with Nvidia falling by 3.65% and AMD falling by 7.27%.

Job Cuts on the Rise

The job market also showed signs of weakness, with U.S. employers announcing 153,074 job cuts in October. This marks a sharp rise from the same period last year and brings the total number of layoffs for the year to over one million. The surge in job cuts is largely due to cost-cutting measures, automation initiatives, and a slowdown in demand across several sectors.

Fed Commentary

The Federal Reserve’s commentary on the economy was mixed, with some officials expressing caution about inflation and others suggesting that a rate cut may be necessary. Fed dove Miran expressed a more dovish view, suggesting that a rate cut in December and a move towards a neutral policy stance may be necessary. However, other officials, such as Hammack, Barr, and Williams, expressed more caution, citing the need to control inflation and the potential risks of easing monetary policy too quickly.

Fed Officials’ Views

• Fed’s Miran: Expects a rate cut in December and favors moving towards a neutral policy stance in 50-basis-point increments.
• Fed’s Hammack: Believes monetary policy should remain modestly restrictive, citing the need to control inflation.
• Fed’s Barr: Described a two-speed economy, with wealthier households thriving while many others struggle to save and remain more vulnerable to economic shocks.
• Fed’s Williams: Emphasized the importance of staying aware of the effective lower bound when setting policy and reaffirmed the Fed’s commitment to fighting inflation.
• Fed’s Goolsbee: Expressed caution about continuing the rate-cutting cycle, citing uncertainty around inflation data and a labor market that remains largely stable.

Global Economic News

The Bank of England held its Bank Rate at 4.00% in a tight 5-4 vote, with some members favoring a 25 bps rate cut. The Committee noted that CPI inflation has peaked and that underlying disinflation is progressing, but the balance of risks has shifted, with less concern about persistent inflation and greater attention to weaker demand pressures.

Currency and Bond Markets

The dollar was mixed, falling against the EUR, JPY, GBP, and CHF, but rising against the commodity currencies. The 10-year yield fell by 7 bps to 4.087%, while the 2-year yield fell by -7.3 basis points to 3.559%.

US Government Shutdown

The US government shutdown continues, with the airports Transportation Secretary Sean Duffy saying that traffic at 40 major airports would be reduced by as much as 10% as a safety measure. Air-traffic controllers and airport security agents aren’t being paid in the shutdown, which federal officials said has led to stretched staffing, flight delays, and long security lines.

Conclusion

In conclusion, the market experienced a decline for the second time this week, with the S&P index and NASDAQ index both falling. The job market also showed signs of weakness, with a surge in job cuts in October. The Federal Reserve’s commentary was mixed, with some officials expressing caution about inflation and others suggesting that a rate cut may be necessary. The global economic news was also mixed, with the Bank of England holding its Bank Rate at 4.00% and the dollar being mixed against other currencies. The US government shutdown continues, with significant impacts on air travel. Overall, the market and economy are experiencing a period of uncertainty and volatility.