This week could be the calm before the storm. We do get megacap tech earnings, another major central bank cutting rates and PMI survey data which led to the ECB embarking on a back-to-back rate reduction. But the first week or so of November brings with it the maelstrom of the non-farm payrolls report, the US elections and the FOMC meeting. (Plus, more company results from the biggest companies on the planet!)
Equity markets are eyeing up a Trump 2.0 victory on November 7 with both the S&P 500 and the Dow Jones Industrial Average surging to new record highs on Friday. That sealed six straight weeks of gains, the best win streak of 2024. The increasing probability of a Trump win, with a clean Republican sweep, is seen boosting stocks and also the broad USD.
That said, the latest swing state polls signal the race remains closer than prediction market odds suggest. Experts say the result will depend on just a few tens of thousands of voters in these states. Typically, stocks do well after the election when uncertainty abates, so whether we see that idea upended will be key. In any event, expect US politics to increasingly impact markets as we get closer to the big day.
Regarding company results, more than 70 S&P 500 companies have reported earnings so far. 75% of those have beaten expectations, according to FactSet. Focus will be on Tesla announcing their numbers after the US closing bell on Wednesday. Their shares have sharply underperformed the market this year, losing nearly 12% compared to the S&P 500’s 23.5% gain. A disappointing report could reignite concerns about tech stock valuations, which have climbed along with the broader indices.