Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.03%) finished flat on Friday despite a better-than-expected October employment report, although it still ended the week higher by 7.3%. The Nasdaq Composite (+0.04%) and Dow Jones Industrial Average (-0.2%) also finished little changed in a lackluster session, while the Russell 2000 fell 1.0%.  

Briefly, nonfarm payrolls increased by 638,000 (Briefing.com consensus 570,000) and the unemployment rate was 6.9% (Briefing.com consensus 7.7%), versus 7.9% in September. This was the sixth straight month of a labor market recovery, but it supported a view among some lawmakers, including Senate Majority Leader McConnell, for a smaller stimulus deal. 

The S&P 500 energy sector dropped 2.1% amid weaker oil prices ($37.14/bbl, -$1.61, -4.2%), which was attributed to profit taking and the notion that a slower economic recovery would hinder oil demand. No other sector gained or lost more than 1.0%. 

The financials sector (-0.8%) also showed relative weakness, while the defensive-oriented consumer staples (+0.4%), information technology (+0.3%), and health care (+0.2%) sectors posted modest gains. 

Beneath the index and sector levels was a more interesting story with lots of earnings movers. To name a few, T-Mobile US (TMUS 123.56, +6.30, +5.4%), CVS Health (CVS 64.95, +3.54, +5.8%), Uber (UBER 44.87, +2.91, +6.9%), and Square (SQ 198.08, +22.85, +13.0%) stood out with impressive gains, while Electronic Arts (EA 119.19, -9.14, -7.1%) disappointed. 

Separately, the presidential election remained undecided but former Vice President Biden continued to lead President Trump 253-214 in the electoral count, according to most news outlets. A winner could be announced this weekend. 

In the Treasury market, longer-dated maturities succumbed to renewed selling interest following the release of the employment report. The 2-yr yield increased one basis point to 0.16%, and the 10-yr yield increased four basis points to 0.82%. The U.S. Dollar Index decreased 0.3% to 92.26. 

Reviewing Friday's economic data, which featured the Employment Situation Report for October:

• Nonfarm payrolls increased by 638,000 in October (Briefing.com consensus 570,000); the unemployment rate was 6.9% (Briefing.com consensus 7.7%), versus 7.9% in September; average hourly earnings increased 0.1% (Briefing.com consensus 0.2%) versus a downwardly revised 0.0% (from 0.1%) in September.
  • The key takeaway from the report perhaps is that, because it was better than expected, Congress could potentially see a rationale for cutting down the size of the ~$2 trillion fiscal stimulus package that was discussed before the election.
• Consumer credit increased by $16.2 billion in September (Briefing.com consensus $5.0 billion) after contracting by an upwardly revised $6.9 bln (from -$7.2 billion) in August.
  • The key takeaway from the report is that revolving credit increased for the first time since February.
• Wholesale inventories increased 0.4% m/m in September (Briefing.com consensus -0.1%) following a 0.5% increase in August.

Investors will not receive any notable economic data on Monday.

• Nasdaq Composite +32.6% YTD
• S&P 500 +8.6% YTD
• Dow Jones Industrial Average -0.8% YTD
• Russell 2000 -1.5% YTD