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Stock Market Update Thursday October 31, 2024

Stock Market Update Thursday, October 31, 2024 The S&P 500 extended its decline for a second consecutive session, weighed down by losses in heavyweight tech stocks, notably Microsoft and Meta. Meta’s cautionary outlook on escalating AI-related expenses, despite a modest revenue beat, further pressured sentiment. This led to a tech-driven sell-off, with the S&P 500 sliding 1.9% and the Nasdaq 100 retreating by 2.5%. In economic news, a key U.S. inflation measure showed a moderate uptick, accompanied by rising consumer spending, underscoring the robustness of underlying economic activity.


Away From Stocks: Despite the equity downturn, Treasury's showed muted movement as markets await tomorrow’s payroll report; the two-year yield ticked up slightly to 4.16% from 4.15%, while the 30-year bond eased down two basis points to 4.47%.

In commodities, WTI crude extended its rally, nearing $71 per barrel, while gold dropped 1.5%, settling at $2,748 per ounce. Bitcoin saw a pullback, holding just above $70,000, and market volatility climbed as the VIX spiked nearly three points, reaching just above 23.

 

Our cycle pivot date was was Tuesday October 29th, marking a shift to the downside, and we anticipate this trend to continue until our next pivot date, which will occur in November. We will announce the specific date as it approaches. Today's Consumer Price Index (CPI) report edged slightly higher than anticipated, coming in at 2.7% against the consensus forecast of 2.5%. While this reading might usually trigger policy tightening considerations, we anticipate minimal immediate impact on Federal Reserve positioning, given the dovish stance currently dominating policy decisions. This perspective is further bolstered by this week's recent employment reports, which showed softer-than-expected employment growth—a metric that presently holds more weight in Fed assessments than inflation alone.


Looking ahead to tomorrow's Non-Farm Payroll (NFP) data, the street consensus targets around 101k jobs, while our projections suggest a stronger showing in the range of 120k to 130k. Such an outcome should maintain Fed dovishness, supporting a jobs number that is not too hot.


Election Date: Tuesday, November 5, 2024

Adding a layer of uncertainty, our research suggests potential delays in declaring an election winner, with polling issues potentially extending the timeline to mid-November. This delay could induce investor caution, with the VIX expected to stay elevated, particularly as we approach the VIX expiration date on November 21, 2024.


Bottom Line:


A sell alert was activated on October 30, 2024 in the Dow Jones Industrial Average ETF (DIA) and the S&P 500 Equal Weight ETF (RSP), indicating elevated downside risk in these indexes. At this time, we recommend against initiating or adding positions within these sectors, given current market conditions and the heightened caution advisable for equity allocations. Notably, the S&P 500 SPY ETF, QQQ ETF, and Russell 2000 IWM ETF continue to maintain buy signals. For a broader market sell-off to materialize, sell triggers across all major indices would be required, underscoring the resilience observed in select segments of the market. We have a cycle pivot date on October 29th, and traders should anticipate increased volatility leading up to this date as market participants position themselves ahead of the upcoming 2024 election. Our previous pivot date was October 8th, following which the SPY rallied for seven trading days to reach a record high on October 17th. This pattern of sideways, choppy price action is characteristic of October in an election year. Our year-end outlook remains optimistic, supported by our proprietary algorithm and favorable liquidity conditions. Cash on the sidelines continues to accumulate, creating potential for a strong inflow into equities. Jerome Powell & Co. maintain a dovish stance, reflecting a "no landing" economic scenario, while China's PBOC has introduced significant monetary easing, adding further global stimulus. October's volatility aligns with historical seasonal patterns; yet we believe markets will resume an upward trajectory following the election, paving the way for a strong December rally. The VIX is projected to settle in the 10-11 range, indicating a reduction in implied volatility as we approach the holiday season, which typically supports a risk-on sentiment in equity markets.


Election Date: Tuesday, November 5, 2024 Key state polls align with national surveys, reflecting a highly competitive race for the White House with most outcomes within statistical margins of error. Both campaigns are allocating resources strategically to the six swing states. Wisconsin, Nevada, Michigan, Pennsylvania and North Carolina. Polls indicate tight races in each jurisdiction. Market participants are closely monitoring the upcoming U.S. election results, but we anticipate a favorable market reaction regardless of the outcome, as either candidate is expected to support short-term growth.


Macro News November 1, 2024

8:30 AM

  • Oct Average Hourly Earnings m/m

    • Forecast: 0.3%

    • Previous: 0.4%


  • Oct Unemployment Rate

    • Forecast: 4.1%

    • Previous: 4.1%


  • Oct Non-farm Payrolls

    • Forecast: 101,000

    • Previous: 254,000


9:45 AM

  • Oct Final S&P Manufacturing PMI

    • Forecast: 47.8

    • Previous: 47.8

10:00 AM

  • Oct ISM Manufacturing PMI

    • Forecast: 47.6

    • Previous: 47.2











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