--- title: "Stocks Climb on ‘Solid, But Not Blistering’ US Growth" description: "A rally in most big techs drove stocks higher, while data showing the world’s largest economy is holding up bolstered the outlook for Corporate America." type: "NewsArticle" publisher: "Daily Maverick" site: "https://www.dailymaverick.co.za" section: "Business Maverick" author: "Bloomberg" author_url: "https://www.dailymaverick.co.za/author/bloomberg/" canonical_url: "https://www.dailymaverick.co.za/article/2024-10-30-stocks-climb-on-solid-but-not-blistering-us-growth/" published: "2024-10-30T19:19:45" updated: "2024-10-30T19:19:47" lang: "en-ZA" word_count: 1261 --- # Stocks Climb on ‘Solid, But Not Blistering’ US Growth > A rally in most big techs drove stocks higher, while data showing the world’s largest economy is holding up bolstered the outlook for Corporate America. By Bloomberg · Published 30 October 2024, 21:19 SAST · Updated 30 October 2024, 21:19 SAST ## Key points - In a market that’s part party and part panic room, Alphabet's earnings dance stole the spotlight from chipmakers' stumbles, while investors brace for a potential Trump-tastic election outcome that could send stocks soaring—or crashing—faster than you can say “buy the dip.” - The Bloomberg “Magnificent Seven” index rose 1.2%, driven by Alphabet’s 5.5% jump on strong sales, despite a downturn in chipmakers like Nvidia and AMD. - The US economy showed robust growth in Q3, with household spending and defense spending increasing, while inflation remained aligned with the Fed's target. - Market optimism is building ahead of the US election, with expectations of corporate buybacks and inflows into equities as November approaches. - However, strategists warn that a potential Republican sweep could signal a market pullback, as current bullish sentiment may be unsustainable amidst global earnings downgrades. ## Content The Bloomberg “Magnificent Seven” gauge rose 1.2%, with Alphabet Inc. jumping 5.5% on better-than-expected sales. Those gains overshadowed a rout in chipmakers, driven by a slide in Nvidia Corp. and underwhelming results at Advanced Micro Devices Inc. Server maker Super Micro Computer Inc. tumbled 32% as Ernst & Young LLP resigned as its auditor. Meta Platforms Inc. and Microsoft Corp. are due to report results after the close. *Stocks rise after solid data.* The US economy expanded at a robust pace in the third quarter as household purchases accelerated ahead of the election and the federal government ramped up defense spending. A closely watched measure of underlying inflation rose 2.2%, roughly in line with the Federal Reserve’s target. “Solid but not blistering growth fits nicely within the current economic backdrop,” said Bret Kenwell at eToro. “Too hot of a print and investors would likely question the Fed’s decision to cut rates by 50 basis points in September, while a weak print could reignite worries about a deteriorating economy.” Kenwell says investors should cheer for strong economic data — even if that means slower-than-expected rate cuts from the Fed. “It’s far better to have a strong economy and earnings driving stocks higher rather than hopes of easing monetary policy from the Fed,” he said. The S&P 500 rose 0.3%. The Nasdaq 100 fell 0.1%. The Dow Jones Industrial Average added 0.5%. Homebuilders rallied as pending home sales in the US saw their biggest gain since 2020. Visa Inc. climbed on solid results. Eli Lilly & Co. got hit after lowering its guidance amid lackluster sales of its weight-loss drug. Bond traders trimmed bets on policy easing after Wednesday’s economic reports. Treasury two-year yields, which are more sensitive to imminent Fed moves, rose five basis points to 4.14%. [Oil](https://www.bloomberg.com/news/articles/2024-10-29/latest-oil-market-news-and-analysis-for-october-30) rebounded after a two-day decline on tightening US crude stockpiles and the prospect of more attacks in the Middle East. The US stock market’s fundamental flows are turning increasingly [bullish](https://www.bloomberg.com/news/articles/2024-10-30/buybacks-fomo-vanna-tailwind-prime-stocks-for-year-end-rally), which should give equities a fresh jolt once the US election is out of the way. The elements of a rally are building up — stocks are entering a historically strong season and companies are starting to buy back shares. Investors may be over-hedged for the series of earnings, US election and central bank risks looming through early November. And with market volatility declining from the early-August high, systematic investors and options desks may be forced to snap up stocks. Selling by mutual funds — typically the biggest offloader of stocks — is fading into the end of the month. That’s set to reverse, with November typically seeing inflows into equities, while at the same time the corporate buyback window is re-opening with an estimate of $6 billion of buying every single day in November, according to Scott Rubner, a managing director for global markets and tactical specialist at Goldman Sachs. “Animal spirits” could return to markets in the wake of the US election, Barclays Plc strategists led by Emmanuel Cau wrote in a note, saying as investors appear to be in “wait-and-see” mode into the vote. Equity inflows were steady in October with caution remaining under the hood and volumes low. The strategists say that hedge funds and systematic strategies added to their equity positionsin October, after largely being on the sidelines in September. While US stocks may be rising ahead of a potential victory for Donald Trump in next week’s US election, strategists at Citigroup Inc. say a clean sweep for the Republican party will be a [signal to sell](https://www.bloomberg.com/news/articles/2024-10-30/sell-stocks-if-trump-win-fuels-the-rally-citi-s-chronert-says). A Trump win is generally seen as good news for stocks because his proposals to lower corporate taxes would likely benefit company earnings. The Citi strategists argue, however, that the “near-euphoric sentiment” that’s driving the S&P 500 toward a sixth straight month of gains is leaving it ripe for a pullback. Meantime, JPMorgan Chase & Co. strategists said earnings downgrades are dominant across the world, a backdrop that would rarely support equity prices. Strategists led by Khuram Chaudhry noted that while global equity indexes continue to trade near all-time highs, equity sentiment seems to have peaked and is now mean-reverting, with positive sentiment very likely to dwindle as global consensus earnings downgrades increase. This month’s rout in [Treasuries](https://www.bloomberg.com/news/articles/2024-10-30/treasury-rout-deals-fresh-blow-to-fast-money-quants-in-year-of-the-whipsaw) is hammering trend-chasing quant investors who had built up bullish positions in bonds, the latest setback for a strategy that has misfired badly at times this year amid market convulsions. The quants, known as commodity trading advisers, seek to profit from momentum in assets such as bonds, stocks and currencies. Most recently, they piled into wagers that US government debt would keep rallying as the Fed launched interest-rate cuts, amassing the largest long positions in three years as of late September, according to data compiled by Deutsche Bank AG. “The year of the whipsaw continues,” said Andrew Beer, founder of Dynamic Beta Investments, a firm that runs funds that replicate strategies made by CTAs and hedge funds. “Just as CTAs load up on a trend, it reverses.” ### Corporate Highlights: - [Caterpillar Inc.](https://www.bloomberg.com/news/articles/2024-10-30/caterpillar-misses-estimates-on-weakening-demand-in-construction), the maker of iconic yellow bulldozers, reduced its sales outlook from a slowdown in construction activity around the world. - [Reddit Inc.](https://www.bloomberg.com/news/articles/2024-10-29/reddit-signals-strong-holiday-quarter-to-come-shares-soar), the social network operator that went public in March, surged after sales and forecast beat analyst expectations. - [Snap Inc.](https://www.bloomberg.com/news/articles/2024-10-29/snap-drops-after-projecting-slower-holiday-advertising-sales) soared after reporting third-quarter revenue that slightly topped analysts’ expectations, suggesting the overhaul of its advertising business is catching on with marketers. - Qorvo Inc., a semiconductor maker forecast third-quarter revenue and profit that fell far short of estimates. The weak guidance highlights fears regarding smartphone demand amid reports of order cuts by Apple Inc. - [AbbVie Inc.](https://www.bloomberg.com/news/articles/2024-10-30/abbvie-lifts-profit-outlook-as-inflammatory-drugs-rinvoq-skyrizi-beat-estimates) raised its full-year profit forecast as demand for its top-selling anti-inflammatory drugs, Rinvoq and Skyrizi, exceeded expectations. - [Humana Inc.](https://www.bloomberg.com/news/articles/2024-10-30/humana-delivers-upbeat-earnings-report-after-string-of-setbacks) issued a more optimistic 2024 forecast after third-quarter profit exceeded expectations, breaking with larger peers that have struggled to contain medical costs. - [Chipotle Mexican Grill Inc.](https://www.bloomberg.com/news/articles/2024-10-29/chipotle-sinks-after-sales-fall-short-of-investor-expectations) sank as fell just short of Wall Street’s expectations, highlighting the high bar to which investors are holding the chain after it’s outpaced many peers this year. - [Shake Shack Inc.](https://www.bloomberg.com/news/articles/2024-10-30/shake-shack-shak-gains-with-chain-improving-workforce-productivity) quarterly sales beat Wall Street estimates as the burger chain said a new workforce model had raised its labor sales per hour to the highest level since 2019. ### Key events this week: - China Manufacturing and non-manufacturing PMI, Thursday - Bank of Japan rate decision, Thursday - Eurozone CPI, unemployment, Thursday - US personal income, spending and PCE inflation data, initial jobless claims, Thursday - Amazon, Apple earnings, Thursday - China Caixin manufacturing PMI, Friday - US employment, ISM manufacturing, Friday This is a modal window. 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Some of the main moves in markets: ### Stocks - The S&P 500 rose 0.3% as of 12 p.m. New York time - The Nasdaq 100 fell 0.1% - The Dow Jones Industrial Average rose 0.5% - The Stoxx Europe 600 fell 1.1% - The MSCI World Index rose 0.1% - Bloomberg Magnificent 7 Total Return Index rose 1.2% - The Russell 2000 Index rose 0.6% ### Currencies - The Bloomberg Dollar Spot Index fell 0.2% - The euro rose 0.4% to $1.0862 - The British pound was little changed at $1.3009 - The Japanese yen rose 0.1% to 153.17 per dollar ### Cryptocurrencies - Bitcoin fell 0.5% to $71,980.45 - Ether rose 2.4% to $2,683.28 ### Bonds - The yield on 10-year Treasuries was little changed at 4.25% - Germany’s 10-year yield advanced four basis points to 2.37% - Britain’s 10-year yield advanced three basis points to 4.35% ### Commodities - West Texas Intermediate crude rose 2.6% to $68.97 a barrel - Spot gold rose 0.4% to $2,784.97 an ounce