Weekly Market Outlook: U.S. October Nonfarm Payroll and Q3 Earnings from Tech Giants

Insights – This week, markets will focus on the U.S. October Nonfarm Payroll report. Following a solid increase of 254,000 jobs in September, October’s job growth is expected to slow, with forecasts of 140,000 new jobs. Investors will also watch Q3 GDP and September PCE data. Another key event is the Bank of Japan's interest rate decision on Thursday, though BoJ Governor Kazuo Ueda has already signaled no rate hikes in the immediate future. Additionally, major U.S. tech companies like Google (GOOGL-US), Microsoft (MSFT-US), Meta Platforms (META-US), AMD (AMD-US), Apple (AAPL-US), and Amazon (AMZN-US) will report earnings, potentially increasing market volatility.

Last Week, U.S. durable goods orders fell in September, with a decline in commercial aircraft orders offsetting gains in business equipment. Manufacturing remains weak, with the ISM Manufacturing Index contracting for the sixth consecutive month. The Bank of Canada cut its benchmark rate by 50 basis points to 3.75%, with further cuts expected. Furthermore, Tesla saw a Q3 revenue increase of 8%, boosting its stock by 21.92%, marking its largest single-day gain since 2013.

U.S. October Nonfarm Payroll Report

The report, due Friday, is expected to show 140,000 new jobs, down from 254,000 in September, with unemployment steady at 4.1%. Average hourly earnings growth may slow from 0.4% to 0.3%. Fed Chair Powell has emphasized the importance of the labor market, signaling that the Fed is unlikely to welcome further job growth declines.

Bank of Japan Rate Decision

The BoJ will announce its interest rate decision on Thursday, with expectations that rates will remain unchanged in the 0.15%-0.25% range. Currently, Wall Street anticipates the next rate hike in December or January, with 53% of respondents expecting a December hike. 

Recently, BoJ Governor Kazuo Ueda indicated to the media that the Bank will not raise rates at its November meeting, stating that there is still ample time to formulate policy. On Thursday at 14:30, Ueda will hold a press conference on monetary policy, with market attention focused on how the BoJ adjusts its inflation forecast for FY2024 and Ueda's comments on potential rate hikes and their influencing factors.

Earnings from U.S. Tech Giants

This week, Google, Microsoft, Meta, AMD, Apple, and Amazon will release earnings. Additionally, Intel, ON Semiconductor, ExxonMobil, Chevron, and Shell will report results. These tech giants make up 23% of the S&P 500’s weight, meaning their earnings could have a significant impact on the broader market. Wall Street expects capital expenditures for Microsoft, Alphabet, Meta, and Amazon to increase by 56% year-over-year in Q3, with further growth in Q4.

Key Economics Data and Events

Wednesday: U.S. October ADP Employment Change

Thursday: U.S. September Core PCE Price Index

Friday:U.S. October Nonfarm Payrolls

Key Earnings to Watch

Tuesday: BP, Pfizer, PayPal, McDonald’s, Alphabet, AMD

Wednesday:Meta, Microsoft, Caterpillar, UBS, Robinhood

Thursday:Amazon, Apple, Intel