Reuters-U.S. equities posted solid gains in the trading week ending November 3, recording the best weekly performance on record since the start of this year, supported by falling yields on U.S. Treasuries as well as rising shares of some major companies listed on the standard U.S. stock exchange. stock market indices.
In this respect, S&P 500 earnings reached around 5.85%, representing the highest weekly gains since November 1, 2022. The Dow Jones Industrial Average also made gains of around 5.07%, and weekly earnings for the Nasdaq 100 index were estimated at the equivalent of 6.48%, the highest since October 2022.
US stock indices recorded strong gains at the close of last Friday’s session, as the Nasdaq 100 index ended the session up by around 1.21% at 15,099.49 points, and the S&P 500 index ended its trading at the 4,358.35 point level, up. by 0.94%, and the Dow Jones Industrial Average also rose by 0.66% to 34,061.33 points.
The most important factors affecting U.S. stock market performance this week
Strong weekly earnings for US equity indices were supported by a resurgence in risk appetite on global equity markets and by rising shares of major US technology companies, as well as record-low yields on US Treasuries.
First: a resurgence of risk appetite on the global stock market
The strong resumption of risk appetite in the stock markets helped boost US stock market earnings last week, with the VIX 500 volatility index stabilizing at its lowest levels in 6 weeks, reflecting a decline in investor fears and a resumption of risk appetite in US equities. market.
Another survivor is that demand for gold – one of the best-known safe-haven assets – has fallen sharply. Spot gold contracts suffered losses of around 0.7% in the trading week just ended.
Second: the sharp fall in US Treasury yields
The fall in US Treasury bond yields at various maturities has led to an increase in weekly earnings for US equities. Often, low demand for bond yields leads to a recovery in US stock performance, as investing in the stock market seems to be a better investment. opportunity compared to bond yields.
In this respect, it’s worth noting that the weak demand for US Treasury yields occurred against the backdrop of the release of some important economic developments and data, including labor market data and the US Federal Reserve’s decision, which reinforced market expectations of The arrival of the US Federal Reserve at the final interest rate, in other words, it’s possible that the Federal Reserve won’t raise interest rates again at its next meetings.
1. Negative data on the US labor market
US labor market data was very negative during October, as official data revealed that the economy created around 150,000 jobs, well below market expectations that the economy had created around 180,000 jobs, and previous figures had shown that the US economy created around 336,000 jobs last September, which was revised down to 297,000 claims.
At the same time, the US unemployment rate rose to 3.9% in the same month, worse than market expectations and the index’s previous reading, which indicated that US unemployment had stabilized at the 3.8% level.
These economic data have reinforced the possibility that the US Federal Reserve will stop raising interest rates at its next meetings, given deteriorating labor market conditions and slowing job growth, which has hurt US bond movements. Yields on 10-year U.S. Treasuries suffered weekly losses of over 5%, boosting U.S. stock market indices.
2. The US Federal Reserve’s decision to stop raising interest rates at its November meeting
This added to the downward pressure facing US bond yields at the time, with the US Federal Reserve deciding last week to keep the interest rate at the current level of 5.50% for the second meeting in a row, and statements by US Federal Reserve Governor Jerome Powell. following the release of the decision, interest rates also strengthened for the second time in a row to the current level of 5.50%. Powell stated that inflation has fallen and that decisions to raise interest rates will depend on economic data, indicating the possibility that interest rate expectations of US Federal Reserve members will change.
This fuelled market fears that the rise in Treasury yields had already reached a record level, which had a positive impact on US stock market movements over the past week.
3. a sharp rise in the shares of major US-listed technology companies
In addition to the fact that the US Federal Reserve stopped raising interest rates at its last meeting, the US stock market was strongly supported by gains in the shares of many major US companies. For example, shares in technology company Apple (NASDAQ: AAPL) hit weekly earnings of around 5% after the company announced… Earnings per share rose to $1.46, exceeding Wall Street’s expectations of a rise in earnings per share to just $1.39, which had a positive impact on the weekly performance of US equities, particularly the Nasdaq Composite Index.
