Trading on Wall Street began the day with selling pressure fueled by elevated equity valuations and the ongoing government shutdown. However, a glimmer of hope emerged as media reports suggested that the funding deadlock might resolve sooner than anticipated. In a mixed performance for the markets, two of the three major indexes ended the day in positive territory.
The anticipated October jobs report, typically a significant economic indicator, was notably absent, continuing a delay caused by the shutdown for a second consecutive month. Bill Adams, Chief Economist at Comerica, indicated that private data suggest a drop in employment for October. He attributes this to weak private hiring failing to compensate for a decline in federal employment, attributed to workers who took voluntary buyouts earlier this year leaving payrolls.
Consumer sentiment took a notable dip, as evidenced by the University of Michigan’s Consumer Sentiment Index, which plummeted to 50.3 in November from 53.6 in October. This marks the lowest reading since June 2022 and the second-lowest since at least 1978. Joanne Hsu, Director of Surveys of Consumers, highlighted that the prolonged government shutdown has led to increased consumer worries about the economy’s stability. Expectations around personal finances and future business conditions dropped significantly, with an 11% decline observed across most demographics, although those holding substantial stock assets reported an increase in sentiment.
José Torres, a senior economist at Interactive Brokers, noted that the ongoing government shutdown is the main factor eroding household confidence. This diminishing confidence is compounded by existing price pressures and weakening labor demand, ultimately limiting consumer spending potential. As a response to market uncertainties, investors have been shifting towards safe-haven assets, such as gold, which saw a 0.4% increase, trading at $3,999.40 per ounce. Riskier asset exposure has decreased as a result.
The tech-heavy Nasdaq Composite experienced a slight decline of 0.2%, settling at 23,004. On the other hand, the S&P 500 edged up by 0.1% to finish at 6,728, and the Dow Jones Industrial Average rose by 0.2% to close at 46,987. All indexes ended significantly above their session lows following a CNBC report detailing a new Democratic proposal for a short-term funding bill tied to an extension of Affordable Care Act tax credits.
For the week, the Dow fell 1.4%, the S&P 500 decreased by 1.8%, and the Nasdaq declined by 3.2%.
In corporate news, shares of Block (XYZ) dropped by 7.7% after the payments processor reported third-quarter earnings and revenue that fell short of expectations. Nevertheless, Argus Research analyst Stephen Biggar maintained a Buy rating for Block. He noted that the company reported improved gross payment volume from the second to third quarter and raised its full-year gross profit growth forecast. Biggar believes Block is poised to capitalize on the evolving payments landscape, particularly with increased mobile payment usage and the integration of various payment technologies.
Tesla (TSLA) also faced challenges, with shares declining by 3.7% following shareholders’ approval of a new compensation package for CEO Elon Musk, which could be valued at up to $1 trillion. Despite the stock’s drop, Wedbush analyst Daniel Ives, who holds a Buy rating with a price target of $600, emphasized that this vote secures Musk’s continued leadership, an asset he deems vital for the company. Ives forecasts that Tesla could achieve a $2 trillion market cap by early 2026 and aims for $3 trillion by the end of next year, bolstered by advancements in autonomous driving and robotics.
