Commentary

US stocks ended lower after a busy week of company earnings reports and economic data. The Nasdaq and S&P MidCap 400 hit record highs midweek but dropped on Thursday, with technology stocks like Meta and Microsoft underperforming value stocks. About 42% of S&P 500 companies shared 3Q results, including big tech names – Meta, Microsoft, Apple, and Amazon. Nonfarm payrolls barely grew, though wages rose slightly more than expected. Manufacturing also struggled, with business investment slowing as companies worry about future policy changes. Treasury yields hit a four-month high, while the corporate bond market saw steady demand despite cautious trading before the US elections.

European stocks dropped last week, with the STOXX Europe 600 Index falling 1.52%. Concerns about the Middle East, disappointing earnings, and lower expectations for ECB rate cuts affected markets, leading to declines in France’s CAC 40, Germany’s DAX, and Italy’s FTSE MIB. The eurozone economy grew by 0.4% in 3Q, higher than expected, as Germany avoided recession and France and Spain saw strong growth, while Italy’s economy remained flat. Inflation in the eurozone rose to 2% in October, partly due to last year’s low base effect. In the UK, Chancellor Rachel Reeves announced a budget with new taxes and increased borrowing, raising investor concerns and causing bond prices to fall. The UK’s budget office now expects slower economic growth.