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U.S. equities post weekly gains amid rate cut decision, economic data

NEW YORK
2019-11-03 00:44

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NEW YORK, Nov. 2 (Xinhua) -- U.S. equities extended gains in the busy week marked by a rate cut decision from the Federal Reserve and a slew of key economic data.

In the week ending Nov. 1, the Dow climbed 1.44 percent, the S&P 500 gained 1.47 percent and the Nasdaq advanced 1.74 percent.

Wall Street had a massive rally on Friday with the 30-stock index closing up 301.13 points to 27,347.36, fueled by better-than-anticipated jobs data.

U.S. employers added 128,000 jobs in October, the U.S. Bureau of Labor Statistics reported on Friday. The reading topped the 75,000 forecast of economists surveyed by MarketWatch.

Job gains mainly occurred in food services and drinking establishments, social assistance, and financial activities, the report showed.

Within manufacturing, employment in motor vehicles and parts decreased, the bureau said, due to the six-week strike at General Motors.

Unemployment rate edged up by 0.1 percentage point to 3.6 percent, after hitting 3.5 percent in September, the lowest since December 1969, according to the report.

Despite the strong jobs data, an important gauge of U.S. manufacturing was less satisfactory.

Economic activity in U.S. manufacturing sector contracted for a third straight month in October amid global trade uncertainties, the Institute for Supply Management (ISM) reported on Friday.

The October ISM manufacturing PMI (purchasing managers' index) came in at 48.3 percent, following a September reading of 47.8 percent. Any reading below 50 percent indicates a contraction.

Friday's market movement came after the Federal Reserve cut rates earlier this week by 25 basis points, the central bank's third rate cut this year.

The Federal Open Market Committee (FOMC), the Fed's rate-setting body, trimmed the target for the federal funds rate by 25 basis points to a range of 1.5 percent to 1.75 percent after concluding its two-day policy meeting on Wednesday, largely in line with market expectation.

"We took this step to help keep the U.S. economy strong in the face of global developments and to provide some insurance against ongoing risks," Fed Chairman Jerome Powell told reporters at a press conference Wednesday afternoon, highlighting the risks of slowing global growth, trade policy developments, as well as muted inflation pressure.

The Fed also signaled a pause in easing cycle, while indicating it would be a while before the central bank hikes rates.

"The 'pause' on rate decisions was well received by traders who remain cautiously optimistic in an environment that has shown us that in the absence of news to drive market direction it reverts back to the fundamentals," Mark Otto, a New York Stock Exchange Designated Market Maker and Global Market Commentator at GTS, told Xinhua.

"Going forward, traders will continue to focus on the developing situation regarding the China-U.S. trade negotiations, Brexit and S&P 500 earnings," he added.

A flurry of stronger-than-expected corporate earnings also lent some support to the market.

Around 70 percent of S&P 500 companies have reported quarterly numbers thus far, according to FactSet. Of those companies, 75 percent have topped analysts' estimates.

On other key economic data, U.S. economy expanded at an annual rate of 1.9 percent in the third quarter of the year, slightly lower than the 2-percent growth rate in the second quarter, the Department of Commerce reported on Wednesday.

The slower GDP growth in the third quarter reflected decelerations in personal consumption expenditures and government spending, and a larger decrease in nonresidential fixed investment, according to the department.

In the week ending Oct. 26, U.S. initial jobless claims, a rough way to measure layoffs, stood at 218,000, an increase of 5,000 from the previous week's revised level, the Department of Labor reported on Thursday. Economists polled by MarketWatch estimated new claims would total a seasonally adjusted 215,000.

U.S. consumer confidence index stood at 125.9 in October, down from 126.3 in September, the Conference Board reported on Tuesday. The reading fell short of market forecasts.
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