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Another Week of Volatility After Key Earnings Reported and Backlogged Economic Data Released
It was another volatile week for markets, with equities finishing lower as investors continued taking profits and trimming exposure to AI-related themes. Uncertainty around the Fed’s next move also weighed on sentiment. Global equities, as measured by the MSCI ACWI, finished the week down 2.45%, while domestic large-cap equities in the S&P 500 declined 1.91%. Emerging markets experienced the largest pullback with a 3.71% drop, and domestic small caps were the best performer, down just 0.75%.
NVIDIA Earnings Report
All eyes were on NVIDIA’s earnings last week, easily the most anticipated and arguably most important report of the quarter. NVIDIA, the largest company in the S&P 500 by market capitalization and the key driver of the AI trade, posted record revenue on Wednesday evening that exceeded analysts’ expectations, fueled by continued strong demand for its AI chips. The company also issued a robust fourth-quarter revenue forecast that surpassed consensus estimates. Despite the positive results, investors used the news as an opportunity to trim exposure, leading both NVIDIA and the broader market to finish lower on Thursday.
September Jobs Report
With the shutdown coming to an end, delayed economic reports began to be released, and on Thursday the long-anticipated September jobs report was finally published, painting a mixed picture. U.S. employers added 119,000 jobs for the month, significantly higher than expected and a meaningful improvement from the summer, however the unemployment rate ticked up to 4.4 percent from 4.3 percent in the prior month, marking its highest level in four years.
Other Notable News
One item we have been watching is how the market is predicting the Fed’s next move during its December meeting, and over the past week we saw a significant shift in expectations, moving from essentially a coin flip on a December rate cut to nearly 70 percent as of Friday, and this change came after the announcement that October’s unemployment rate and Consumer Price Index will not be released due to the shutdown.
Looking Ahead
For the week ahead, Tuesday is set to be the busiest day for data with retail sales, Producer Price Index, Consumer Confidence Index, and pending home sales. Thursday markets are closed for the Thanksgiving holiday, and Friday markets will close early at 1 PM.
As Always
I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
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