Stocks Closed Lower Yesterday, All Eyes On This Morning's Employment Situation Report Stocks closed sharply lower yesterday, led by the Nasdaq's -2.76% decline, and followed by the S&P's -1.86%. Microsoft and Meta, both of which reported positive EPS and sales surprises on Wednesday afternoon, fell by -6.05% and 4.09% respectively. After the close we heard from Apple, which posted a positive EPS surprise of 10.1%, and a positive sales surprise of 0.39%. That translated to a quarterly EPS growth rate of 12.3% vs. this time last year, and a sales growth of 6.07%. They were down -1.82% in the regular session before earnings, and off roughly -0.85% in after-hours trade following earnings. Amazon also reported after the close and posted a positive EPS surprise of 25.4%, and a positive sales surprise of 1.15%. That equated to a quarterly EPS growth rate of 68.2% vs. this time last year, and a sales growth of 11.0%. They were lower by -3.28% in the regular session before earnings, but up roughly 4.75% in after-hours trade following earnings. Intel is another tech company that reported after the close. Even though they posted a quarterly EPS loss of -46 cents vs. estimates for only a -3 cent loss, they posted a positive sales surprise of 2.10%. While earnings were sharply lower vs. the 41 cents they earned last year at this time, sales were only down -6.21%. But they guided current quarter adjusted earnings and sales above views by 50% and 1.02% respectively. They were down -3.50% in the regular session, but up roughly 9.70% in after-hours trade. Today we'll get earnings from 99 more companies, including Exxon Mobile, Berkshire Hathaway and Cardinal Health. Next week's earnings docket is even busier with 1,579 companies on deck to report. In other news, yesterday's Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge, came in largely as expected, with the headline number up 0.2% m/m vs. last month's 0.1% and views for 0.2%, while the y/y rate was up 2.1% vs. last month's 2.3% and estimates for 2.1%. The core rate (ex-food & energy) was up 0.3% m/m vs. last month's 0.2% and expectations for 0.3%, while the y/y rate came in at 2.7% vs. last month's 2.7% and the consensus for 2.6%. While it could've been better, inflation is still subdued, relatively speaking. And the CME's FedWatch tool shows Fed Funds traders still have a 90.1% probability that the Fed will cuts rates by another 25 basis points next week (11/7). But before that, we'll get the always important Employment Situation report this morning. This report is just as important to the Fed, maybe even more with inflation risks having receded. After Wednesday's blowout labor report by ADP, which showed private payrolls at 233,000 vs. last month's 159,000 and the consensus for just 115,000, all eyes will be on this morning's jobs report by the Bureau of Labor Statistics (BLS). The consensus is calling for 125,000 new jobs to have been created in October (90,000 in the private sector and 35,000 in the public), with the unemployment rate staying steady at 4.1%. While the ADP report has a spotty track record of predicting what the BLS report will say, a more than 100% upside surprise like Wednesday's ADP report, would truly be a shocker. In addition to the employment report, we'll also get the PMI Manufacturing report, the ISM Manufacturing report, and Construction Spending. And we'll hear from Fed policymaker Lorie Logan. But the main event will be the Employment Situation report. That comes out at 8:30 AM ET. Best,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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