U.S. Market Averages Extend Gains On Hopes of Stable Interest Rates

Barry Adams
02 Nov, 2023
New York City

Stocks advanced for the second day after the Federal Reserve held rates steady, encouraging investors to increase stock exposure.

In a widely anticipated decision, the Federal Reserve held the fed funds rate range between 5.25% and 5.5%, a 22-year high as the central bank battles to cool inflation to the target rate of 2%.

The Federal Reserve's battle to cool the economy and labor market and slow wage growth got some support from the latest jobless data and labor cost productivity report.

Initial claims for jobless benefits increased from 5,000 to 217,000 in the week ending October 28, a two-month high, the U.S. Department of Labor reported Thursday.

The four-week moving average, which removes week-to-week volatility, edged up 2,000 to 210,000.

Moreover, continuing claims rose by 35,000 to 1.818 million in the previous week, the highest since April, indicating that job hunters are struggling to find work.

U.S. nonfarm business sector unit costs declined by 0.8% in the third quarter, following an upwardly revised 3.2% increase in the previous quarter, according to the U.S. Bureau of Labor Statistics.

Unit labor costs declined for the first time since the fourth quarter of 2022, after hourly compensation increased by 3.9% and productivity advanced by 4.7%.

Unit labor costs rose by 1.9% from a year ago in the third quarter, the slowest pace of increase since the second quarter of 2021.

 

U.S. indexes and Yields

The S&P 500 index increased 1.0% to 4,287.45, and the Nasdaq Composite advanced 1.2% to 13,218.45. 

The yield on 2-year Treasury notes decreased to 4.9%, 10-year Treasury notes inched lower to 4.65%, and 30-year Treasury bonds edged down to 4.84%.

Crude oil decreased $0.90 to $81.40 a barrel, and natural gas prices fell 6 cents to $3.42 a thermal unit.

Gold increased $2.01 to $1,981.48 an ounce ahead of the Fed's interest rate decision later in the day.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 105.96. 

 

U.S. Stock Movers

Airbnb Inc. increased 0.9% to $120.50 after the vacation rental platform reported higher-than-expected third-quarter revenue but forecasted weaker-than-expected fourth-quarter revenue.

Qualcomm Inc. jumped 6% to $118.0 after the advanced communication chip designer reported better-than-expected quarterly revenue and earnings.

The mobile communication chip maker also forecast higher-than-expected revenue in the fourth quarter, signaling a possible recovery in the microchip industry.

SolarEdge Technologies Inc. dropped 10.5% to $67.65 after the company reported weaker-than-expected sales in the third quarter and forecasted more weakness in the fourth quarter.

Revenue in the third quarter declined to $725 million and loss per share was 55 cents, and the company guided fourth quarter sales to drop in the range between $275 million and $320 million.

The demand for home solar installations nosedived on rising interest rates after California cut the compensation rate for solar incentive programs in April.

California is expected to announce similar compensation cuts for multifamily, farm, and school buildings, which could further dampen the demand.

Peloton Interactive Inc. dropped 6.5% to $4.50 after the company reported a wider-than-expected loss.

Revenue in the quarter fell 3% to $595.1 million from $616.5 million; net loss shrank to $159.1 million from $408.5 million; and diluted loss per share shrank to 44 cents from $1.20 a year ago.

The company forecasted revenue in the fiscal 2024 second quarter ending December in the range of $715 million and $750 million, a decrease of 8% from the midpoint of $793 million a year ago.