Stocks Recorded Best Gains in Nearly a Year on Falling Yield and Jobs

Weekly Wrap Content for the week of Nov 3:

1. Week 44 major indexes performance;

2. Week 44 US sector indexes performance;

3. Major indexes weekly charts of support and resistance levels;

U.S.

For the week of 3 Nov, U.S three major indexes recorded its strongest weekly gain since November 2022, as signs of a slowing economy and a policy statement from the Federal Reserve that was generally perceived as dovish led to a sharp decrease in long-term bond yields. Growth stocks and tech-heavy Nasdaq Composite Index (COMP) outperformed somewhat, but the gains were broad-based and led by the small-cap Russell 2000 Index, which scored its best weekly gain since October 2022. The SPX index was up nearly 6% for the week, its strongest weekly gain in a year. Refer to major indexes’ weekly performance table below.

Monthly index performance for Oct.

Key highlights for the week and outlook:

1.    FOMC meeting concluded on Wednesday left rates steady at 5.5% as was widely expected, but investors appeared encouraged by the post-meeting statement, which signaled that the recent runup in long-term Treasury yields had achieved some of policymakers’ intended tightening in financial conditions, bolstering investors’ confidence that Fed won’t need to take the interest rates any higher. 

2.    Weaker-than-expected jobs report on Friday seemed to confirm that the labor market was cooling. 150k jobs added in October, below expectations and the lowest level since June, and September’s strong gain was revised lower. Meanwhile, the unemployment rate rose to 3.9%, its highest level since January 2022. 

3.    It was the second-busiest week of earnings season. Earnings announcements that have generally come in "better than feared," signaling some hope that corporate profits can hold up despite macroeconomic headwinds.

 

SPX sectors in play

All 11 sectors of the SPX index closed higher in the week. Rates sensitive stocks such as Real Estate(XLRE) and Financials( XLF) outperformed, growth and tech stocks such as Consumer Discretionary(XLY), Communication Services(XLC) and Tech(XLK) were among the top gainers as well. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The major three U.S stock indexes each have recorded more than 5% weekly gains- their best weekly gains nearly in a year. SPX crossed above three major averages from below in a super strong rally week. Click below three indexes for their weekly charts respectively in a new window.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

 

China/HK

Equities in China gained as speculation that U.S. interest rates may have peaked offset broader concerns about the country’s slowing growth.  The Shanghai Composite Index(SSE) rose 0.43%, while blue chip CSI 300 advanced 0.61%. In Hong Kong, the benchmark Hang Seng Index added 1.53%. (Refer to the above weekly performance table).  

Key highlights for the week and outlook for China/HK:

1.    China’s factory activity returned to contraction in October. The official manufacturing PMI fell to a below-consensus 49.5 in October, down from 50.2 in September, as production growth slowed. The nonmanufacturing PMI slowed to a lower-than-expected 50.6 from 51.7 in September. 

2.    China’s ongoing housing market decline remains a serious drag on its growth outlook for many investors despite recent indicators suggesting a demand recovery after Beijing rolled out a flurry of stimulus measures.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

Singapore STI advanced 2.67% this week. The index rebounded to test 3150 resistance level as I wrote in previous weekly post. Interest rates sensitive sectors such as REITs and developers outperformed, AReits gained 7.57%, CLI +6.23%, CICT+5.75% were among the weekly top gainers.

STI weekly chart

Source: Some contents and data excerpted from various public market reports.