Author, Montecito Capital Management
The market ended the week on a shaky note, with the S&P 500 and Dow each down around 1.9 percent, and the Nasdaq off roughly 2.7 percent. The week started with a bit of optimism, as strong earnings from several major tech companies lifted stocks, but that enthusiasm quickly faded. As the week went on, investors began to worry that the run-up in large tech and AI names may have gotten ahead of itself. Once those stocks softened, the broader market followed suit.
Economic data added to the uncertainty. With the federal government shut down, no official October jobs report was released, leaving investors without the usual guidance on employment and wages. In its absence, the ADP private-sector report offered some insight, showing stronger-than-expected hiring, with job gains roughly 40,000 to 50,000 above expectations. While this suggested that labor demand remains solid, the lack of official government data left many unsure about the overall health of the job market.
The Federal Reserve also influenced market expectations. Two Fed officials made comments that pushed traders to consider the possibility of a rate cut in December. One highlighted that inflation progress has been “broader and faster than anticipated,” while another said policy is now “sufficiently restrictive,” implying that further rate hikes may not be needed. These remarks helped calm markets somewhat, though the overall picture remained uncertain.
By the end of the week, valuation concerns, mixed economic signals, and uncertainty around interest rates kept investors cautious. Short-lived rallies failed to gain traction, and the major indexes ultimately finished the week lower across the board.
