Page One
Today is the first day of November. It is also a day set up for buy-the-dip action following Thursday's losses, which came on the heels of earnings results from Microsoft (MSFT) and Meta Platforms (META), and rising Treasury yields.
The pertinent question is, will buy-the-dip interest win out (again) or will there be follow-through selling? The first day of a new month is often good for inflows that support stock prices, and the early indication is that the major indices will follow a buy-the-dip track at the open.
Currently, the S&P 500 futures are up 29 points and are trading 0.5% above fair value, the Nasdaq 100 futures are up 92 points and are trading 0.4% above fair value, and the Dow Jones Industrial Average futures are up 213 points and are trading 0.5% above fair value.
These indications all strengthened after the 8:30 a.m. ET release of the October Employment Situation Report, which printed some jarring payroll numbers. Specifically, nonfarm payrolls were up just 12,000 in October and nonfarm private payrolls decreased by 28,000. These numbers were depressed by the Boeing strike and likely by the effects of Hurricanes Helene and Milton, yet with forecasts suggesting those influences could lop off something on the order of 100,000 positions, the view to October, coupled with sizable downward revisions to the August and September payroll figures, connote softness in hiring activity.
The key takeaway from the report is that it has reinvigorated the market's view that the Fed will stay on a steady rate-cut path that will include cutting the target range for the fed funds rate by 25 basis points at next week's FOMC meeting and again at the December FOMC meeting.
The Treasury market seems to be corroborating this thought. The 2-yr note yield, at 4.21% in front of the release, is at 4.09% now. The 10-yr note yield, at 4.31% in front of the release, is at 4.24% now.
The drop in market rates has facilitated the buy-the-dip interest along with a strong response to Amazon.com's (AMZN) earnings report, and upward moves by Chevron (CVX) and Exxon (XOM) following their earnings results.
AMZN for its part is up nearly 7%, which is a good thing because Apple (AAPL) is down 1.8% in the wake of its earnings results and guidance. If Apple was along for the ride, the opening indication would be even stronger.
It is fine for what it is, though. The key will be maintaining the buy-the-dip line.
Notable headlines from the October Employment Situation Report:
- October nonfarm payrolls increased by 12,000 (Briefing.com consensus 120,000). The 3-month average for total nonfarm payrolls decreased to 104,000 from 148,000. September nonfarm payrolls revised to 223,000 from 254,000. August nonfarm payrolls revised to 78,000 from 159,000.
- October private sector payrolls decreased by 28,000 (Briefing.com consensus 105,000). September private sector payrolls revised to 192,000 from 223,000. August private sector payrolls revised to 37,000 from 114,000.
- October unemployment rate was 4.1% (Briefing.com consensus 4.1%), versus 4.1% in September. Persons unemployed for 27 weeks or more accounted for 22.9% of the unemployed versus 23.7% in September. The U6 unemployment rate, which accounts for unemployed and underemployed workers, held steady at 7.7%.
- October average hourly earnings were up 0.4% (Briefing.com consensus 0.3%) versus a downwardly revised 0.3% (from 0.4%) in September. Over the last 12 months, average hourly earnings have risen 4.0%, versus 3.9% for the 12 months ending in September.
- The average workweek in October was 34.3 hours (Briefing.com consensus 34.2), versus an upwardly revised 34.3 hours (from 34.2) in September. Manufacturing workweek was little changed at 39.9 hours. Factory overtime dipped 0.1 hour to 2.8 hours.
- The labor force participation rate decreased to 62.6% from 62.7%.
- The employment-population ratio fell to 60.0% from 60.2%.
