This week promises to be eventful in the markets, with U.S. employment and GDP data releases and significant earnings reports from major tech companies. As the U.S. presidential election and the Federal Reserve’s November meeting approach, volatility is expected to persist. Here’s what to watch in the markets this week:
Non-Farm Payrolls
Friday’s employment report is expected to show a slowdown in job growth to 111,000 in October due to strikes (at Boeing, Textron, and Hilton Hotels) and disruptions from Hurricanes Helene and Milton. The unemployment rate is anticipated to hold at 4.1%.
The Fed has indicated it plans to cut rates by 25 basis points at its November meeting following a 50 basis point reduction in September; however, this week’s employment data could influence that decision. While the Fed may discount temporary factors affecting payrolls, Tuesday’s September JOLTS data and Thursday’s jobless claims report will be closely monitored for signs of labor market softening.
GDP data
Another key data release is the third-quarter GDP estimate, along with Thursday’s personal income and spending report, which includes the Fed’s preferred inflation gauge, the core PCE price index. Economists project the economy grew at a 3% annual rate, consistent with last quarter’s growth.
Other economic indicators this week include October’s consumer and business confidence reports, pending home sales, and the Institute for Supply Management’s manufacturing index. The Fed’s “communications blackout” period will also begin ahead of its Nov. 7 policy meeting.
Mega-Cap Tech Earnings
Five of the “Magnificent Seven” tech giants are set to report this week. Google’s parent, Alphabet, will release results on Tuesday, followed by Microsoft and Meta Platforms (Facebook’s parent) on Wednesday, and Apple and Amazon on Thursday. Together, these companies make up 23% of the S&P 500’s weight, meaning their results could significantly influence market trends.
Tesla, the first of the seven to report, saw its shares climb last Thursday after CEO Elon Musk expressed confidence that vehicle sales would increase by 20-30% next year. Overall, these tech companies have shown stronger earnings growth than the broader S&P 500, though that gap is expected to narrow in coming quarters.
Market Volatility
This will be the last full trading week before the U.S. presidential election on November 5 and the Fed’s policy decision on November 7, likely keeping investors on high alert. Donald Trump and Kamala Harris are closely matched in polls and in key swing states, with Trump gaining ground in recent weeks. Election forecast markets now show him with a slight edge.
“Investors should prepare for market volatility in the lead-up to the U.S. presidential election,” analysts at UBS Global Wealth Management noted on Thursday. With Nov. 5 approaching, market sentiment is likely to stay fragile.
Oil Prices
Oil prices could drop as trading resumes Monday following Israel’s limited retaliatory strike on Iran over the weekend, which spared Tehran’s oil and nuclear facilities. U.S. Brent and West Texas Intermediate crude futures both rose 4% last week amid ongoing uncertainty about the effects of the October 1 Iranian missile strike and the impending U.S. election.
Iran downplayed the strike, saying it caused limited damage. Meanwhile, energy traders are watching for further details on China’s stimulus measures, although analysts do not expect these policies to significantly boost oil demand.
