The tech-heavy index hit a new intra-day high on Friday and managed to eke out a 0.2% weekly gain. Investors are gearing up for earnings reports this week from several tech heavyweights. Amongst the Magnificent Seven group which have been a strong driver of gains this year, Tesla outperformed after the electric vehicle maker delivered better-than-expected earnings as well as forecasting up to 30% sales growth in 2025.
For the week, the S&P 500 and Dow Jones ended 1% and 2.7% lower, respectively, with most sectors seeing losses. Equities were generally under pressure from a rapid rise in Treasury yields. The jump in yields came as investors reassessed their expectations around rate cutting from the Federal Reserve. The week was relatively light for economic data, however, recent releases have generally been better-than-expected and more supportive of a steadier rate cutting cycle. Markets are currently pricing in a 25 basis point cut at the November meeting. The yield on the 10-year Treasury note ended higher at 4.24%, after settling earlier in the week at its highest level since July.
European markets were also lower on the prospect of a slower pace of monetary easing from the Fed. The pan-European STOXX 600 lost 1.2%, following on from two weeks of gains, with regional indices also retreating for the week. Investors parsed through the latest batch of earnings reports, however, they proved mixed and data from LSEG indicated a lower-than-average percentage of earnings beats so far. The latest economic data gave little cheer, with a preliminary estimate of the eurozone composite Purchasing Managers’ Index (PMI) rising to 49.7 in October from 49.6, but remaining in contractionary territory. Weakness was driven by France and Germany. Indeed, in the International Monetary Fund’s latest World Economic Outlook, it lowered its growth forecast for the eurozone to 0.8% and 1.2% for this year and 2025 respectively, primarily fuelled by downward revisions in Germany.
In Japan, the Nikkei 225 fell by 2.7% for the week as investors were cautious ahead of the weekend’s general election. Some polls were indicating that the ruling Liberal Democratic Party could lose its outright majority, and the uncertainty pushed the yen lower against the US dollar. The Hang Seng lost 1% over the week; however, on the mainland, the Shanghai Composite was one of the few gainers, rising 1.2%. There was some optimism as further stimulus measures were implemented in China. This included the People’s Bank of China (PBoC) injecting 700 billion yuan via its medium-term lending facility, while Chinese banks cut their one and five-year loan prime rates by 25 basis points in line with PBoC’s move last month.