more earnings, FOMC meeting, and October nonfarm payrolls

U.S. equities surged on Friday, lifted higher by strong earnings and higher-than-expected consumer spending growth. The Dow rose for the sixth consecutive session, ending the week nearly 6% higher. The S&P 500 rose 4% for the week, while the Nasdaq gained over 2%. U.S. Treasury yields fell throughout the week, with the yield on the 10-year note hitting a low of 3.9% on Thursday, before rebounding close to 4% on Friday. Oil prices rallied this week, amid speculation that OPEC and its allies may cut production further to support prices, while global supply remains tight. The price of West Texas Intermediate (WTI) crude—the U.S. benchmark—ended the week 3% higher, trading near $88 per barrel. After months of uncertainty, Elon Musk officially completed his $44 billion purchase of Twitter on Thursday, firing the company’s CEO and several other high-ranking executives. We can expect more details next week regarding Twitter’s transition to new management, and the changes Elon Musk has in store for the platform. Musk has said he plans to reduce Twitter’s workforce—potentially laying the stage for layoffs at the company—and alter Twitter’s content moderation policies in order to bolster free speech and promote “healthier” dialogue on the platform. 

Next week will be an eventful one for financial markets, with earnings reports expected from a number of prominent companies including Stryker, Aflac, Pfizer, Moderna, Toyota, Honda, Qualcomm, PayPal, Starbucks, and Kellogg’s, among others. Policymakers at the U.S. Federal Reserve will gather for the two-day November policy meeting of the Federal Open Market Committee (FOMC) beginning Tuesday, with a key interest rate decision expected on Wednesday. The U.S. labor market will also be in the spotlight, as several key reports, including the Bureau of Labor Statistics’ (BLS) October nonfarm payrolls report, will be released. The Institute for Supply Management (ISM) will release the latest PMI figures for the U.S. manufacturing and service sectors.

KEY TAKEAWAYS

Earnings season continues next week. Among the companies reporting will be pharmaceutical giants Pfizer, Moderna, and Eli Lilly; automakers Toyota and Honda, and several companies from the energy sector.
Other companies reporting next week include Uber, Airbnb, Starbucks, Qualcomm, Advanced Micro Devices, Robinhood, and PayPal, among others.
Policymakers at the U.S. Federal Reserve will gather for the two-day policy meeting of the Federal Open Market Committee (FOMC) beginning Tuesday, with an interest rate decision expected on Wednesday
Key labor market reports will be released next week, including the Job Openings and Labor Turnover Survey (JOLTS) for September, ADP's National Employment Report, and the October nonfarm payrolls report published by the Bureau of Labor Statistics (BLS).
The Institute for Supply Management (ISM) will release October PMI survey readings for the U.S. manufacturing and service sectors.

More Earnings Still to Come

Markets are gearing up for another busy week of corporate earnings, as earnings season enters its third week. A number of prominent companies from different sectors are scheduled to report next week. Pharmaceutical giants Eli Lilly and Pfizer will report on Tuesday, while Moderna and Regeneron Pharmaceuticals will follow on Thursday. Two of the world’s largest automakers, Toyota and Honda Motor Company, will report on Thursday and Friday, respectively. Investors can also expect earnings from companies in the energy sector, including ConocoPhillips, Phillips 66, Devon Energy, and Marathon Oil. Airbnb, Uber, PayPal, Stryker, Cigna, Starbucks, Kellogg’s, and The Hershey Company will also report next week, among many others.

Fed’s Rate Hikes Likely to Continue

Starting on Tuesday, policymakers at the U.S. Federal Reserve will gather for the two-day November policy meeting of the Federal Open Market Committee (FOMC). The U.S. central bank is widely expected to raise its benchmark federal funds rate by another 75 basis points (bps) as it continues to combat persistently high inflation. The Fed has tightened monetary policy at the fastest pace in over 40 years this year, raising interest rates by a cumulative 300 bps since March. Fed officials are projecting a year-end federal funds rate of roughly 4.5%.

Is the U.S. Economy Still Adding Jobs?

The latest updates on the U.S. labor market will become available next week. On Tuesday, the Bureau of Labor Statistics (BLS) will release its monthly Job Openings and Labor Turnover Survey (JOLTS) report for September, tracking job openings, hires, quits, and separations for the month. Job openings in the U.S. recorded a steep decline in August, falling to 10.05 million from 11.17 million in September. Job openings have been on a downward trend in recent months from a peak of 11.85 million openings in March, as the labor market has cooled.

On Wednesday, payroll services provider ADP will release its National Employment Report, tracking growth in private sector payrolls in October. Private sector payrolls are projected to have risen by 198,000 in October, decelerating slightly from a 208,000 gain in September. Growth in private sector payrolls has moderated in recent months, from a recent peak of 457,000 in April.

On Friday, market watchers will receive what could be the most important indicator on the health of the labor market, as the BLS will release its nonfarm payrolls report for October. The U.S. economy is projected to have added 220,000 jobs in October, which would mark a slight deceleration from a 263,000 gain in September. Job growth has slowed in recent months as the Federal Reserve hikes interest rates. The unemployment rate is projected to tick higher to 3.6%, up slightly from the current rate of 3.5%—a level that matches the pre-pandemic rate of February 2020.