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After The Close - Stocks began the first session in November firmly to the upside, and the major U.S. indexes marched further into record territory.

A slew of positive developments helped propel the markets higher. A strong jobs report got the ball rolling early on. The U.S. added 128.000 new positions in October, easily topping consensus estimates. The segments showing the biggest gains were leisure and hospitality, education and health services, and professional and business services. Notably, the numbers would have been even stronger, were it not for the six-week GM strike, which erased 42,000 positions in the manufacturing sector. Furthermore, the figures for August and September were revised upwards.

Elsewhere, the Institute for Supply Management’s manufacturing index improved slightly last month, to 48.3% (versus 47.8% in September). However, this indicated a third-consecutive month of contraction (and a decline of more than 10 percentage points from the 12-month high set last November), as the trade war between the U.S. and China continues to weigh on the industrial sector. On the plus side, recent reports suggest that the two sides are making progress. Lastly, the U.S. Commerce reported that spending on construction products increased 0.5% in September, to a seasonally adjusted annual rate of $1.29 trillion.

At the closing bell, the Dow Jones Industrials finished the day with a gain of 301 points, or just over 1.1%. The S&P 500 was ahead by 26 points, and the tech-heavy NASDAQ tacked on 94 points, with the two setting new highs. Most of the 10 major market sectors were firmly in the green for the day, led by energy (+1.9), basic materials (+1.8%) and industrials (+1.6%). Relative safe-haven utility stocks fared the worst, shedding 0.2% on the session.

Meanwhile, oil prices rallied, with light sweet crude up 3.5%, to about $56.10 a barrel. The strong U.S. jobs report, a decline in the U.S. rig count, and a pickup in China’s manufacturing helped boost sentiment. However, the commodity was still down 1% for the week and nearly 12% from a year ago.

Lastly, the European bourses also had a good day. The U.K.’s FTSE 100 and Germany’s DAX each closed with a three-quarter percent gain, while France’s CAC-40 wasn’t far behind with an increase of half a percentage point. – Mario Ferro

At the time of this article's writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - The Federal Reserve reduced interest rates on Wednesday for the third time this year, and while it did not indicate that it would be cutting them again later in 2019, it did suggest that it would not start raising them until inflation was showing signs of heating up. That is clearly not the case now. So, in spite of signaling that it just might now pause in its rate cutting program, the stock market, apparently satisfied with the present low level of borrowing costs, rallied nicely into the finish on Wednesday. Then, after the market closed, China implied that it had doubts about pushing for a long-term trade arrangement.

With global trade a fundamental concern on Wall Street, this suggestion by the world's second largest economy led to a sharp early descent in the stock market. On point, after we passed the first hour of trading, the market was off rather sharply after a hesitant start. In all, the first hour concluded with the Dow Jones Industrial Average down by 235 points; the S&P 500 lower by 22 points; and the NASDAQ was in the red to the tune of more than 50 points. This weak performance attests to the key role being played by our trade relations with China.

The trade impasse and allied concerns overshadowed the report of a series of solid earnings issuances. Hardest hit among the key groups were the industrials, with Dow component Caterpillar (CAT – Free Caterpillar Stock Report) falling sharply. That company is vulnerable to the latest deterioration in our relations with China. At this time, the two nations are seeking a neutral site to sign a Phase 1 accord; a more comprehensive longer-term understanding is the sticking point and may remain so into next year's election. This latest problem, meantime, was countering the continued flow of upbeat reports, with one such coming from Facebook (FB). That stock rose on its results.

The bulls would attempt to make a stand after we reached the 11:00 AM (EDT) mark, and that had been a Dow deficit of nearly 250 points, was pared to 170 points, while the NASDAQ's earlier deficit was cut some 60% from 55 points to just 22 points. But this comeback was not sustainable at that time, and the market would soon be falling to lower lows, with the Dow dropping by more than 265 points in early afternoon. The NASDAQ, however, would not violate its morning lows. As earlier in the session, the focus was on trade as well as this morning's just-issued report on non-farm payrolls for October (see below).

In addition to the jobs report, the morning also will see the release of the ISM manufacturing survey. The past two months, this sector has seen a modest contraction; expectations for the October survey is for a third straight downturn here, only a lesser pullback. Meanwhile, the stock market continued to wilt into the final hour and with some 30 minutes to go, the Dow still was off a little less than 200 points, as the Street was attempting another late comeback. That attempt was somewhat successful, as the Dow would close down just 140 points and the NASDAQ would post just a narrow loss.

Now we begin a new month, and as we cast our eyes towards Asia, we notice that stocks were mostly higher in the overnight hours; in Europe, the leading bourses are climbing on strong data out of China and the better-than-expected U.S. jobs report. Meantime, yields on the 10-year Treasury note, which fell further yesterday, to 1.69%, now are at 1.71% after the jobs release. As to the employment report, data issued at 8:30 AM (EDT) showed that non-farm payrolls rose by 128,000 last month. That was well above expectations of 85,000.

In other aspects of this closely watched report, we saw that the jobless rate came in at 3.6%, which was little changed from a month earlier, while job growth totals for August and September were both revised up sharply. Specifically, the payroll increase for August went from 168,000 to 219,000 and for September was changed from 136,000 to 180,000. Also, average hourly wages were up six cents last month, and are ahead 3.0% for the past year. Finally, the labor force participation rate came in at 63.3%; it is slowly edging upward so far this year. Not surprisingly, the equity futures rallied on this release and suggest that the Dow will open about 100 points higher when trading resumes shortly. – Harvey S. Katz, CFA  

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.