US Stocks Jump on Amazon, Intel Strength; Fed’s Rate Cut in Focus Next Week

Stocks Start November with Gains, Led by Amazon and Intel

Stocks kicked off November with solid gains as Amazon and Intel rallied, helping offset mixed economic data. The Dow Jones Industrial Average rose 450 points (1.1%), while the S&P 500 and Nasdaq Composite added 0.9% and 1.2%, respectively.

Amazon surged over 7%, exceeding Wall Street’s earnings expectations with strong growth in cloud and advertising segments. Intel also gained 8.3% after beating revenue forecasts and issuing optimistic guidance. Despite recent losses in other tech giants like Microsoft and Meta, these gains lifted investor sentiment, especially within tech-focused indices.

Jobs Report Misses but Market Reaction Muted

Friday’s jobs report showed only 12,000 new jobs in October, well below the expected 100,000 and marking the lowest increase since December 2020. The unemployment rate stayed at 4.1%, consistent with forecasts. Market reactions to this data remained subdued as many traders attributed the soft numbers to temporary disruptions from hurricanes and a recent Boeing strike, rather than a fundamental labor market downturn.

Rob Williams, chief investment strategist at Sage Advisory, noted that tech remains a core driver, though some sector rotation has provided additional support.

Fed Expected to Cut Rates as Planned

Despite the weaker jobs report, the Federal Reserve is widely anticipated to proceed with a 25-basis-point rate cut at its November policy meeting. Futures markets showed a 99% probability of this cut, which would bring rates to the 4.50%-4.75% range. Another similar cut is likely by year-end, as rate forecasts continue to support further easing through mid-2024.

Analysts such as Clark Bellin of Bellwether Wealth suggest that factors like labor strikes and weather distortions will not alter the Fed’s easing path, given the need to support economic stability.

Sector Performance Reflects Mixed Sentiment

Sector performance remained varied this week. Information technology was the worst performer, down 2.9%, largely driven by Super Micro Computer’s 41.6% drop. Meanwhile, the communication services sector led gains, up 2%, followed by consumer discretionary and financials.

Amazon’s strong results also lifted retail-focused ETFs, with the ProShares Online Retail ETF (ONLN) and Consumer Discretionary Select Sector SPDR Fund (XLY) gaining 1.5% and over 2%, respectively.

Market Forecast

The market’s upward momentum faces potential headwinds as volatility remains elevated around key events like the upcoming Fed meeting and U.S. presidential election. The outlook remains cautiously bullish, especially for large-cap tech and retail sectors, though broader market conditions could soften if economic and labor data continue to weaken. Traders should prepare for possible shifts in sentiment in the near term.