The Dow Jones Industrial Average gained 401.97 points, or 1.26%, to close at 32,403.22. The S&P 500 rose 1.36% to 3,770.55 and the Nasdaq Composite added 1.28% to 10,475.25. All major averages closed lower for the week. The Dow fell 1.4% after four straight weeks of gains. The S&P and Nasdaq fell 3.35% and 5.65%, respectively, to snap two-week winning streaks. — Samantha Subin
Morgan Stanley’s Slimmon Plays ‘Mass Divide’ Between Large-Cap Tech Stocks and Rest of Market
A “massive bifurcation” is underway between mega-cap tech stocks and the rest of the market, says Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management. Many popular tech stocks have sold off sharply in recent days due to disappointing earnings results and forecasts. Despite the downdraft in their valuations, Slimmon says to avoid many of these names as earnings should decline. Most also trade at a premium to the rest of the market. Instead, Slimmon points investors to stocks he’s confident will continue to grow their numbers even in a slowing economy. These sectors have also cut estimates and are trading at multiples in the low-teens or high single digits. One area he sees as positive is building stocks and home retailers which have been hit hard by mortgage rates but are expected to recover from current levels. “These groups really started to collapse in the fourth quarter of last year, anticipating that interest rates would go up,” he said. “I think eventually the economy will slow down and it won’t be good for the housing market, but mortgage rates could start to come down again.” — Samantha Subin
Morgan Stanley says there is further deterioration ahead
Morgan Stanley remains “fundamentally bearish”, saying leading indicators point to further deterioration ahead. The firm recommended overweighting utilities, healthcare and real estate. Meanwhile, he listed the token and hardware as areas where investors should bear down. However, the firm noted that a Fed pivot could come “sooner rather than later” and that there is the potential for a further rally between 4,000 and 4,150 ahead of what it called “the next leg of this bear market,” which it would come in between 3,000 and 3,200 points. Corporate earnings were closely watched as the company said the “weak macroeconomic” environment was the main talking point among companies. He also noted that average valuations are moving lower as companies start to cut earnings per share. However, the firm said many major indexes, including the S&P 500, saw a rebound in October. — Alex Haring
Fourth-quarter earnings are expected to shrink after eight quarters of expansion, FactSet says
It finally happened. After falling for several months, analysts’ expected growth rate for the S&P 500’s fourth-quarter earnings turned negative. Fourth-quarter earnings are now expected to contract 1 percent — compared with estimated growth of 9.1 percent as of June 30 and 3.9 percent as recently as Sept. 30, FactSet senior earnings analyst John Butters said in a report which was published late Friday. A week ago, on Oct. 28, fourth-quarter earnings were still expected to rise, albeit by a meager 0.2%. Third quarter earnings are currently running at a 2.2% growth rate. If they remain higher than last year, that would mark the S&P 500’s eighth consecutive quarter of year-over-year gains. — Scott Snapper
Stocks rise but set for weekly losses as final trading hour begins
Shares rose as the final hour of trading began on Friday. The Dow Jones industrial average last traded 221 points higher, or 0.7%. The S&P 500 gained 0.8% and the Nasdaq Composite rose 0.6%. — Samantha Subin
Black male unemployment fell in October — but for the wrong reasons
The unemployment rate for black men fell to 5.3 percent in October from 5.8 percent a month earlier on a seasonally adjusted basis. But it wasn’t because the team was necessarily moving into the job market. The downward movement in unemployment for black men is likely due to the labor force participation rate, which fell slightly to 67.2% in October, slightly below the previous month’s reading of 68%. In addition, the employment-to-population ratio for black men fell to 63.6% from 64.1% in September, which could indicate that workers have stopped looking for work, driving the unemployment rate lower. Overall, unemployment for black and Hispanic workers is still higher than for whites. —Carmen Reinick
Truist downgrades technology, sees better opportunities in energy and industry
Truist is rescuing tech stocks amid the latest market shakeup, downgrading the sector to underweight from neutral. “The sector recently broke below an important technical price level and continues to trade at a significant market premium despite earnings momentum at multi-year lows,” Truist said in a note to clients. “Importantly, we are finding better opportunities in other market sectors such as energy, industrials, healthcare and commodities.” Tech stocks continue to trade dearly at a 25% premium to the S&P 500, Truist said. This compares to an average 10-year premium of 6%. The sector, meanwhile, is failing to deliver the strong earnings momentum that investors willingly paid for in the past. The firm recommends the energy sector and defense sectors, such as consumer staples and health care — which tend to perform well in a weakened economic environment. — Samantha Subin
October jobs report shows raises starting to ‘flow’ into economy, Allianz Investment Management’s Ripley says
Friday’s October jobs report may indicate earlier Fed hikes are starting to work their way through the system, said Charlie Ripley, senior investment strategist at Allianz Investment Management. “Today’s payroll number was the lowest year-over-year number and while the pace of the slowdown was not really evident, we could be witnessing the initial effects of policy tightening seeping into the economy,” he said. “The bottom line is that despite the employment data showing no rapid slowdown, the data appears to be moving in the right direction, but at a very slow pace.” — Samantha Subin
Here are some of the biggest midday stock moves on Friday
Block — The mobile payments company jumped 10% on better-than-expected third-quarter results. Block earned 42 cents a share on revenue of $4.52 billion. Analysts polled by Refinitiv had expected earnings of 23 cents per share on revenue of $4.49 billion. Atlassian — Shares of Atlassian fell 33.4% after the collaboration software maker reported lower-than-expected earnings and issued a disappointing outlook. DraftKings — DraftKings fell nearly 28% after warning that a prolonged economic downturn could affect customer spending.
For more motivation, check out the full story. — Michelle Fox
Metals and mining stocks soar, briefly leading ETF to biggest gain in 2.5 years
The SPDR S&P Metals & Mining ETF jumped as much as 8.8% on Friday, briefly putting it on pace for its best day since March 2020 in the depths of the short-lived Covid-19 market (XME climbed 12.7% a day that same month .) Among the individual stocks leading the XME today are TimkenSteel, Peabody Energy, Alcoa, MP Materials, Ryerson, Century Aluminum and Freeport-McMoRan, all up more than 10% in a point before they retreated. The much larger iShares MSCI Global Metals & Mining Producers ETF ($19.4 billion vs. $820 million for the XME) was at one point as much as 9.7 percent higher on Friday. December copper contracts hit $3.6665, the highest level since Sept. 13, taking the week’s gain to 6.75% (best week since March 2022) and leaving copper higher on the year. Aluminum contracts on the London Metal Exchange rose to $2,337.5 a metric ton, up more than 5% for the week. —Scott Schnipper, Gina Francolla
S&P 500 New Lows Beat New Highs, But 78% of Highs Are Also All-Time Records
New 52-week lows in the S&P 500 (20) outnumbered new highs (18) early Friday, but nearly four out of five of the new highs set all-time records. One of the new lows (Microsoft) is in the Dow Jones Industrial Average, as is one of the new highs (Chevron). New 52-week lows: New 52-week highs:
Monster Beverage (MNST), the highest ever, dating back to 1992 on the Nasdaq ConocoPhillips (COP), all-time high since 2002 merger of Conoco and Phillips Petroleum Chevron (CVX), all-time high merged with Texaco in 2000 EOG Resources (EOG), trading at all-time high since trading began in 1989 Diamondback Energy (FANG), all-time high in 2012 IPO Marathon Petroleum (MPC), all-time high in spinoff from Marathon Oil in 2011 SLB (SLB), higher than 2018 Exxon (XOM), trading at all-time high since listing on NYSE in 1920 Everest RE Group (RE), all-time highs back to 1995 IPO Principal Financial (PFG), all-time high since 2001 IPO AmerisourceBergen Corporation (ABC), all-time high since 1995 IPO Cardinal Health (CAH), higher than 2017; Gilead Sciences (GILD), higher since 2020 Eli Lilly (LLY), record going back to initial trading in 1952 McKesson (MCK),…
