Key Takeaways

  • The S&P 500 leaves correction territory with a 6% weekly gain
  • A tightening labor market suggests the Fed is on the right path

Tech Earnings & Treasury Yields

The S&P 500 has made a successful start to November, closing in the green with a small but mighty 0.18% rise on Monday. The upswing contributed to the broad-based index’s 6% jump last week, scoring the best week since November 2022 and notching its sixth session of growth in a row. Although tech earnings had a hand in fueling the gains, signals that the Federal Reserve might be done with its tightening cycle sweetened the deal. 

A weaker-than-expected nonfarm payroll print report bolstered stock gains, as investors took the sharp hiring slowdown as a sign that the Fed’s hawkish interest rate stance is finally starting to sting. Only 150,000 jobs were created in October, underwhelming analysts who had forecast a rise of 180,000. 

The soft NFP data in turn sent bond yields plunging, such as the 10-year Treasury yield, which sank to 4.557% from its peak of 5% in October. The 10-year Treasury yield has a direct knock-on effect on interest rates for mortgages and other types of loans. The recent pullback influenced growth in the real-estate sector of the S&P 500, sparking an 8.5% increase in the realty division over the last week. 

Having said that, the large-cap index has felt the most growth in the Technology sector this year. Computer chip maker Nvidia has led the gains, while Facebook parent Meta and online marketplace Amazon followed in hot pursuit. The so-called Magnificent Seven, which is made up of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla, fleshed out part of the S&P 500’s 13.7% gain this year to date.

Like a Phoenix

The S&P 500 wasn’t the only one to rise from the ashes of a punishing October. The Dow Jones Industrial Average eked out a tiny 0.10% gain, a small win that pushed the blue-chip index into its longest streak of consecutive gains since July. The tech-heavy Nasdaq jumped 0.3% by Monday’s closing bell, marking its longest winning streak since January with a 7-session run. 

Looking ahead, the economic calendar for the week is fairly light. Earnings season is slowing down, but investors can still look forward to reports from the likes of Walt Disney and MGM Resorts. 

Moreover, Fed Chair Jay Powell is set to speak twice this week. Investors will be hanging on to every word for some key insights into the current economic state of the US and for any indications of a possible rate hike by the end of the year. 

Put simply, traders should keep a close eye on the major indices in the coming month. November is a historically prosperous month for the S&P 500 according to “The Stock Trader’s Almanac”. Keep your ear to the ground for Jay Powell’s upcoming speeches, which are sure to illuminate the Federal Reserve’s perception of the economy.