A strong recovery this week was largely offset by stocks falling hard Friday as the S&P 500 rose 1.51% overall after pulling back 2.80% on the last trading day. Markets dropped to end the week after a stronger than expected jobs report crushed any hopes that the Federal Reserve would temper its rate hikes soon.
Highlights of the Week
Outside of the monthly jobs report, the larger stories this week were Elon Musk once again looking to (maybe) close out his deal to acquire Twitter after facing an uphill legal battle to get out of the commitment. The agreed upon price remains $54.20 leading the stock price to shoot upwards from its $43e price before the news.
Twitter (TWTR) stock sits currently around $49 as the deal has still yet to be closed and there remains speculation it may not go through as talks have stalled due to financing concerns. The Tesla CEO said earlier in the week that the offer was contingent on receiving $13 billion in debt financing. As of now the two sides have until October 28 to close the deal after the trial was originally scheduled for October 17.
Other big news came from abroad early in the week as Prime Minister of the U.K. Liz Truss gained some sense and dropped her planned tax cuts for the top earners in the United Kingdom. Seems like the right choice to not plan tax cuts for the wealthy when dealing with high inflation and a weakening currency.
Lastly, Elon Musk grabbed headlines outside of his Twitter takeover as Tesla (TSLA) missed on vehicle delivery estimates and saw its stock price fall 15% over the week. Meanwhile, Advanced Micro Devices (AMD) stock fell more than 13% Friday after issuing preliminary third-quarter results that were well below initial forecasts as the semiconductor company deals with weak PC demand and sustained supply chain issues.
The jobs report was unfortunately stronger than expected. Not a very usual sentiment but the strong September Employment Situation Report reaffirmed that the Fed is unlikely to cool down its monetary policy tightening soon. 263,000 jobs were added last month following the 315,000 added in August, analysts expected a gain of 250,000. The unemployment rate fell to 3.5% while analysts projected it to stay flat at 3.7%. Meanwhile, average hourly earnings rose 0.3% once again and the labor force participation rate dipped slightly to 62.3% from 62.4%.
Outside of the monthly jobs report initial unemployment claims for last week rose from 190,000 to 219,000 new claims, surpassing estimates for 203,000 claims. The ISM Non-Manufacturing Index dipped from 56.9% to 56.7% while the ISM Manufacturing Index dropped from 52.8% to 50.9%. Lastly, the trade deficit shrank from $67.9 billion to $67.4 billion.
Earnings reports were very light this week with the biggest names having reported on Thursday which included Conagra (CAG), Constellation Brands (STZ), McCormick (MKC), and Levi Strauss (LEVI). Conagra and Constellation both surpassed earnings and revenue estimates while McCormick missed earnings projections and Levi underperformed on revenue expectations. Levi saw its shares hit the most with its stock falling over 11% on Friday as its full-year EPS and revenue guidance fell below the consensus.
All in all, the S&P 500 gained 1.51%, the Dow Jones Industrial Average rose 1.99%, and the NASDAQ increased 0.73%.