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SPEAKER_00: Pivotal, my weekly market review, November 3rd, 2024.
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SPEAKER_00: U.S.
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SPEAKER_00: markets shook off the weekend's news of Israel's bombing of Iran and looming
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SPEAKER_00: political gridlock in Japan and embarked on an incredibly busy earnings and
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SPEAKER_00: economic data pact last full week before both the election and the next Fed
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SPEAKER_00: interest rate decision on a positive note at the open on Monday.
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SPEAKER_00: Oil prices suffered their biggest one-day fall in over two years on the back of an
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SPEAKER_00: apparent lack of damage to Iranian oil facilities during Israel's attack.
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SPEAKER_00: This hit the energy sector,
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SPEAKER_00: but most stocks generally got a boost from the retreat in recently extended oil
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SPEAKER_00: prices and at least a temporary dip in the geopolitical temperature.
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SPEAKER_00: And indexes finished the session higher, although off the highs of the day.
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SPEAKER_00: Old school names Ford,
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SPEAKER_00: McDonald's,
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SPEAKER_00: Xerox,
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SPEAKER_00: Black & Decker and JetBlue all issued rather troubling earnings reports which
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SPEAKER_00: weighed on the markets on Tuesday morning.
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SPEAKER_00: While the job openings and labor turnover survey jolts showed a lower number of open positions
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SPEAKER_00: than expected,
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SPEAKER_00: the Consumer Confidence Index showed a long overdue major leap in how confident
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SPEAKER_00: consumers feel about what is clearly a really strong US economy.
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SPEAKER_00: Stocks like that and the indexes led by the Nasdaq recovered from their early
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SPEAKER_00: losses to move into the green zone.
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SPEAKER_00: But in the end,
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SPEAKER_00: the gains were relatively small as traders kept their powder dry ahead of the real
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SPEAKER_00: business end of the week with a slew of big dog earnings and economic data starting
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SPEAKER_00: after Tuesday's closing bell.
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SPEAKER_00: Alphabet Google kicked things off by solidly beating analyst estimates for earnings
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SPEAKER_00: and revenue,
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SPEAKER_00: but showed an alarming increase in capital expenditure,
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SPEAKER_00: much of it AI-related.
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SPEAKER_00: AMD's results disappointed, and Eli Lilly's forward guidance was unimpressive.
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SPEAKER_00: The bigger picture,
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SPEAKER_00: however,
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SPEAKER_00: remains vigorous with the third quarter gross domestic product GDP coming in at
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SPEAKER_00: plus 2.8 percent,
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SPEAKER_00: pointing to an economy that's humming along nicely with strong consumer spending
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SPEAKER_00: supported by a robust labor market and business investment that remains solid.
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SPEAKER_00: The net effect on stocks on Wednesday ended up being minimal,
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SPEAKER_00: with the indexes floating around either side of unchanged most of the day,
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SPEAKER_00: eventually ending the session with light losses.
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SPEAKER_00: After hours,
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SPEAKER_00: we learned that Microsoft's cloud computing business and office software fueled
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SPEAKER_00: stronger than projected revenue growth in Q3,
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SPEAKER_00: but the company is struggling to bring data centers online fast enough to keep up
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SPEAKER_00: with demand for AI services.
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SPEAKER_00: Facebook failed to beat estimates on revenue despite a decent earnings number and
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SPEAKER_00: its wearables division,
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SPEAKER_00: headsets and glasses continues to rip through ridiculous amounts of cash with
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SPEAKER_00: apparently very little sign of light at the end of the tunnel.
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SPEAKER_00: The Bank of Japan held interest rates unchanged,
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SPEAKER_00: but the Microsoft and Meta reports gave the broad market no chance and dragged
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SPEAKER_00: stock prices significantly lower on Thursday.
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SPEAKER_00: And things only got worse when the Fed's favorite inflation measure,
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SPEAKER_00: the Core Personal Consumption Expenditures,
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SPEAKER_00: PCE Price Index,
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SPEAKER_00: showed some unexpected stickiness in the rate of inflation.
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SPEAKER_00: This further hurt the narrative of imminent outsized Fed interest rate cuts.
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SPEAKER_00: Stocks in general had a bad day.
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SPEAKER_00: All of the S&P 500 gains for the month of October were wiped out in the final session of the month.
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SPEAKER_00: But tech and AI names did even worse, suffering something of a Halloween massacre.
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SPEAKER_00: After Thursday's close,
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SPEAKER_00: Amazon reported better than expected earnings and revenue with Amazon Web Services,
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SPEAKER_00: the standout performer.
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SPEAKER_00: These days,
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SPEAKER_00: Wall Street has become accustomed to the Magnificent Seven and other tech and AI
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SPEAKER_00: related names,
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SPEAKER_00: not just beating forecasts,
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SPEAKER_00: but absolutely smashing them.
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SPEAKER_00: This proved to be Apple's downfall as it reported slightly higher than expected earnings and revenues.
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SPEAKER_00: But the word slightly proved to be a problem for the market,
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SPEAKER_00: which sent the stock tumbling in after hours trading.
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SPEAKER_00: On Friday morning,
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SPEAKER_00: before the opening bell,
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SPEAKER_00: the jewel in the crown of what was a very crowded week of data,
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SPEAKER_00: the jobs report,
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SPEAKER_00: was released.
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SPEAKER_00: It showed a heavily reduced payroll number of just 12,000 additional jobs added in October,
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SPEAKER_00: but with the huge caveat that the studied period was very distorted,
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SPEAKER_00: including two massive hurricanes and significant labor strikes.
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SPEAKER_00: Big revisions and corrections can be expected in next month's report.
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SPEAKER_00: September's number was revised downwards, but the unemployment rate remained unchanged at 4.1%.
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SPEAKER_00: Wall Street saw nothing here,
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SPEAKER_00: likely to derail a quarter point rate cut this week,
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SPEAKER_00: and interest rates fell back and stocks moved higher at the open and held on to
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SPEAKER_00: those gains all day,
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SPEAKER_00: but still ended up lower for the week.
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SPEAKER_00: For the Nasdaq, it was the first weekly loss in the last two months.
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SPEAKER_00: This week will be absolutely pivotal for markets.
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SPEAKER_00: The world could be a very different place by the next time you read one of my reports, or not.
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SPEAKER_00: The US election is on a knife edge,
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SPEAKER_00: and despite a bit of vocal pro-Trump bravado,
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SPEAKER_00: Wall Street has absolutely no idea what the result will be.
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SPEAKER_00: There is a scenario by which the outcome will be vociferously challenged both in
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SPEAKER_00: the courts and in the streets.
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SPEAKER_00: And Wall Street's most implacable enemies,
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SPEAKER_00: uncertainty and disorder,
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SPEAKER_00: could reign for weeks or possibly even months.
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SPEAKER_00: Meantime,
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SPEAKER_00: the Fed this week needs to read the messy tea leaves of economic data recently
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SPEAKER_00: tainted by hurricanes and strikes,
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SPEAKER_00: as well as trying to stay out of political trouble with its interest rate decision making.
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SPEAKER_00: I don't envy Powell his job this week.