Major market indicators continued to hit their all-time highs last week. The S&P 500 gained 2% over the week and again reached historic levels. On Friday, the index broadly tested the 4,700 mark and closed the trading session close to this value. The capitalization of the Nasdaq 100 increased by 3.2%. On Friday, the indicator tested the historically high level at 16,400 points. The stock market continues to be supported by the corporate reporting season. A two-day Fed meeting took place last week, which ended positively and removed a number of short-term risks. Investors were optimistic about Friday’s October unemployment report.
The Fed has kept the interest rate on federal loan funds in the range from 0% to 0.25% per annum. The decision was in line with the forecasts of economists and market participants. The Fed announced that it will reduce the volume of asset buybacks in November by $ 15 billion and will continue to cut the program in December, which also fully coincided with market expectations. In November, the volume of purchases of US Treasuries will decrease by $ 10 billion – to $ 70 billion, mortgage bonds – by $ 5 billion, to $ 35 billion. In December, the volume of redemption will be reduced to $ 60 billion and $ 30 billion, respectively. instruments to support the US economy during this difficult time, helping to move towards the goals of maximum employment and price stability.
On Friday, important statistics on the US labor market for October was released, which was greeted with optimism by investors, which helped the main indices to rewrite their highs. The number of jobs in the US economy in October increased by 531 thousand, at a maximum rate in three months. According to the revised data, in September the figure increased by 312 thousand, and not by 194 thousand, as previously reported. Unemployment in the United States fell to 4.6% in October, the lowest level since March 2020, down from 4.8% in September. Experts on average expected an increase in the number of jobs in October by 450 thousand and a decrease in unemployment to 4.7%. The labor market situation is a key factor in the Fed’s decisions about the future level of the base interest rate. Fed Chairman Jerome Powell said at a press conference following the Fed meeting on Wednesday that the maximum employment in the US economy could be reached by the second half of 2022. The market is currently expecting the first key rate hike in September 2022.
Oil prices on Friday rose 2.5% on fears of a lack of supply in the market due to the reluctance of OPEC + countries to increase production above the previously planned levels. The ministers of the OPEC + countries on Thursday unanimously decided to continue to follow the plan outlined earlier. OPEC + has been increasing oil production by 400 thousand barrels per day every month since July in order to offset the 9.7 million b / d limits taken at the height of the COVID-19 pandemic, and meets monthly to assess the market situation. We note that the supply in the oil market is insufficient, and we can expect an increase in its volatility, as the oil deficit persists, and the growth in demand will support prices in the short term.
This week the most important macroeconomic event will be the publication of the consumer price index for October on Wednesday. Inflation on a par with the labor market are the two main indicators that the Fed closely monitors when making decisions within the framework of monetary policy. On Monday, there will be speeches by Powell, Fed Vice Chairman Richard Clarida, Chicago Fed President Charles Evans, Philadelphia Fed President Patrick Harker, Fed Board Member Michelle Bowman. The Congress of the Central Committee of the Chinese Communist Party will also begin on the first day of the week. On Tuesday, European Central Bank President Christine Lagarde will open the ECB’s Banking Supervision Forum. On Friday, the University of Michigan US Consumer Sentiment Index for November will be released.