This week it was all about the tightening of the upcoming presidential election. Even a Federal Reserve meeting and a jobs report took a back seat. With the results of the race becoming more-and-more of an uncertainty, Wall Street ebbed. The Fed, as expected, passed on a November rate hike, but December is all but certain. To wit: The Labor Department reported that 161,000 new jobs were created in October, below the 175,000 projected. However, August and September were revised upward; there was a surprise 2.8% pop in hourly wages; and the unemployment rate ticked back down to 4.9%. Fuel for a December 0.25% rate move.
For the week, the S&P 500 was negative by nearly 2% and down for nine consecutive days. The last time that happened was in December of 1980. The Dow Industrials was in the red by 1.5% (after seven straight down days) and the NASDAQ shed 2.8%, led by a rout in technology stocks. There wasn’t one industry sector that was in the plus column this past week. Oil prices fell to $44.07/bbl. sending energy stocks down an average 2.4%, but gold – a flight to safety during uncertain times – soared nearly $28/oz. to above $1,300.
Traders, pricing in – until recently – a Clinton presidency, may send stocks reeling should Donald Trump take Tuesday. But once the fundamentals are back in play, the bulls ought to hold their ground despite some serious sector rotation. This week we will get results from CVS Health, which is among many drug-related companies that are feeling the pinch of pricing headwinds. CVS is expected to report third quarter results of $1.57 per share vs. $1.28 a year-ago, but guidance will prove key. On Friday, bond markets will be closed in observance of Veteran’s Day, but equities will remain open for trading.
Here is the answer to last week’s trivia question: In August, Tesla Motors reached a deal to buy what company? Tata Motors, SolarCity, TRW Automotive or Energizer Holdings. Answer: In a controversial $2.6 billion deal, Tesla offered to acquire San Mateo, California-based SolarCity, a designer and installer of residential and business solar systems. The deal is still pending.
Today’s Trivia Question: Berkshire Hathaway owns which American paint company? Olympic, Behr, Benjamin Moore or Dutch Boy.