Volatility will be front and center this week following last week’s 5.6% drop for the S&P 500.
Big tech reported earnings this past week, with big names like Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOGL), largely unable to shake the overall downward trend in the market. Alphabet notable only declined by -0.8% on the week, substantially better than the other 3, which each declined 5-6%. One notable loser was Twitter (TWTR), which fell a significant -17.8% after it reported the slowest user-base growth in years.
This week we’re looking at the U.S. presidential election, Proposition 22, and U.S. unemployment and non-farm payrolls. First, here’s a look at major asset classes’ returns year-to-date:
Asset Classes by Total Return Year-to-Date
- Chinese Caixin Manufacturing Purchasing Manager’s Index (PMI) (Oct.)
Monday, Nov. 2:
- Market Holidays in Brazil and Mexico for All Saint’s Day
- German Manufacturing PMI (Oct.)
- Eurozone Manufacturing PMI (Oct.)
- French Manufacturing PMI (Oct.)
- Italian Manufacturing PMI (Oct.)
- U.K. Manufacturing PMI (Oct.)
- U.S. Institute for Supply Management (ISM) Manufacturing PMI (Oct.)
Tuesday, Nov. 3:
- German Services PMI (Oct.)
- Eurozone Services PMI (Oct.)
- French Services PMI (Oct.)
- Italian Services PMI (Oct.)
- U.K. Services PMI (Oct.)
- U.S. ADP Nonfarm Employment Change (Oct.)
- U.S. Trade Balance (Sept.)
- U.S. ISM Non-Manufacturing PMI (Oct.)
- Japanese Services PMI (Oct.)
Thursday, Nov. 5:
- Federal Reserve Interest Rate Decision and Press Conference
- Bank of England Interest Rate Decision and Press Conference
- U.K. Construction PMI (Oct.)
- Uber (UBER), Alibaba (BABA), and Square (SQ) report earnings
Friday, Nov. 6:
- U.S. Unemployment Rate (Oct.)
- Canadian Unemployment Rate (Oct.)
- Canadian Ivey PMI (Oct.)
- Brazilian Consumer Price Index (Oct.)
U.S. Presidential Election
Even though Tuesday, November 3, is election day in the U.S., that day will only be the last voting day out of many for most Americans. As of Sunday, October 25, 85.8 million ballots have already been cast, roughly 62% of the total number cast in 2016 according to the U.S. Elections Project. Investors should be ready for uncertainty, as many of these early votes will not be able to be counted on election day, and therefore the outcome of the election may not be known for several days afterwards.
As for what the winner will mean for investors and the nation at large, the President’s ability to affect markets is generally fairly marginal. The winner of the election will affect many important issues, and you can see the candidate’s stances here, but don’t expect the election results to turn your portfolio upside down.
One other issue on the ballot this coming week with clear and substantial investing impact is California Proposition 22. If this ballot initiative passes, it will “define app-based transportation (rideshare) and delivery drivers as independent contractors.” This means that Uber, Lyft (LYFT), and Doordash’s worker’s won’t be subject to California’s Assembly Bill 5, which creates a stricter legal framework for which workers can be classified as independent contractors rather than employees. A California appeals court ruled that Uber and Lyft could not designate their workers as contractors under AB5’s legal framework, so barring a contrary ruling from the state supreme court, Proposition 22 failing to pass could result in the companies needing to overhaul their business model in California, or even pulling out of the state entirely.
U.S. Unemployment and Nonfarm Payrolls
The U.S. labor market has been slowly recovering from enormous damage done by the pandemic and recession earlier this year. The unemployment rate currently stands at 7.9%, down from its peak of 14.7% in April. While that’s a significant improvement, that’s also still more than double the 3.6% it was at in January. Weekly initial jobless claims have fallen to the lowest level since the start of the pandemic, a sign that things may be continuing to move in the right direction as well. However, it’s unclear what effect the enormous increase in new COVID-19 cases will have on the recovery, and how long it may take for that effect to show up.