[New York Stock Market] Rebound on Amazon's Strong Earnings Despite Employment Shock... Nasdaq Up 0.8%

October Nonfarm Payrolls New Indicator Falls Short of Expectations
Reliability Low Due to Hurricane and Large-Scale Strikes
Amazon Reports Strong Q3 Revenue of $158.9 Billion

The New York stock market successfully rebounded after a sharp decline the previous day. Although the U.S. employment data for October was weak, strong earnings from Amazon and others led the rebound.

On the 1st (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 42,052.19, up 288.73 points (0.69%) from the previous trading day. The S&P 500, which is centered on large-cap stocks, rose 23.35 points (0.41%) to 5728.80, and the tech-heavy Nasdaq index closed at 18,239.92, up 144.77 points (0.80%) from the previous session.

The Philadelphia Semiconductor Index, composed of AI and semiconductor-related stocks, also jumped 54.68 points (1.11%) to 5001.42. The Philly Semiconductor Index had plunged 3.35% on the 30th of last month and 4.01% the day before.

The U.S. nonfarm payroll employment data for October fell far short of expectations at a shockingly low level, but due to analyses pointing out that the data's reliability was significantly reduced by factors such as hurricanes and large-scale strikes, it did not have a major impact on the market. The U.S. Department of Labor announced that nonfarm payrolls increased by 12,000 in October compared to the previous month. Wall Street had expected a sharp decline in October employment due to the impact of hurricanes that hit Florida recently, as well as strikes by port unions and aircraft manufacturer Boeing. Contrary to forecasts of an increase of 100,000 to 110,000, the increase was only in the 10,000 range, but the market was not greatly shaken. The response rate during the preparation of the October employment report was 47.4%, significantly lower than usual, which also influenced the results.

Clark Bellin, Chief Investment Officer (CIO) of Bellwether Wealth, said, "The October employment report showed a significant slowdown compared to September, but the figures were mixed with noise due to hurricanes and strikes," adding, "Because of this, the Federal Reserve (Fed) is unlikely to avoid a 25 basis point rate cut at the November meeting."

Amazon's strong earnings supported the rebound. Amazon announced third-quarter revenue of $158.9 billion and earnings per share (EPS) of $1.43. These figures exceeded market expectations, and with strengths maintained in its cloud and advertising businesses, Amazon's stock rose 6.2%. In contrast, Apple’s stock fell 1.33% despite beating market expectations, as signs of a slowdown were detected in its major market, China. Intel’s stock jumped nearly 8% after presenting an optimistic outlook for the fourth quarter despite posting a massive $17 billion loss in the third quarter.

Rob Williams, Chief Investment Strategist at Sage Advisory, said, "Large tech stocks are still the tail that wags the dog," adding, "They remain a huge component for now."

U.S. aircraft manufacturer Boeing’s stock rose 3.5% on news that labor and management had tentatively agreed on a four-year wage increase deal of 38%. Among AI-related stocks, Nvidia, TSMC, and Qualcomm all rose more than 1%, while Broadcom and AMD saw slight declines.

The U.S. manufacturing sector continued its contraction phase. The Institute for Supply Management (ISM) announced that the manufacturing Purchasing Managers' Index (PMI) for October was 46.5. This figure was worse than the market expectation of 47.6 and the previous month’s 47.2. ISM stated that the manufacturing sector had been in contraction for seven consecutive months and that 23 of the past 24 months had been in contraction.

S&P Global’s preliminary U.S. manufacturing PMI for September was 48.5, an improvement over the previously announced 47.8 and the prior month’s 47.3, but concerns about accumulating negative factors followed. By sector, discretionary consumer goods surged 2.4%, while utilities plunged 2.26%. Real estate fell more than 1%, and the remaining sectors remained flat.

The movement expecting the Fed to hold rates steady in November due to the October employment shock disappeared. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the probability of the federal funds rate remaining unchanged in November vanished near the close, and the probability of a 25 basis point cut rose to 98.6%. The chance of a "big cut" (50 basis points) is 1.4%.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) fell 1.28 points (5.53%) to 21.88 from the previous session.