What Moved Markets: Fed Rate Hikes End, GM Strike Over, Crypto Rises
November 4, 2023
Major Uplift in Big Three Indexes
The three major indexes experienced their biggest weekly gains of the year at the close of Friday’s stock market, thanks to a remarkable rally. The surge in market positivity is primarily credited to expectations that the Federal Reserve may have ceased hiking interest rates.
A weaker-than-expected October jobs report, which implies the Fed’s strategy for managing inflation and slowing economic growth might be working, also contributed to this perspective. Bond yields fell this week, with the 10-year Treasury yield dropping to 4.57% from a recent high of 5%.
The “Dow Jones, S&P 500, and Nasdaq Composite”, all saw their best performance since October and November of last year, gaining by 5%, 5.8%, and 6.6%, respectively.
Strike Winding Down in Auto Industry
The strike that has heavily impacted the American auto industry over the past six weeks appears to be drawing towards its end. Among Detroit’s Big Three automakers, General Motors (GM) was the last to reach a tentative agreement with the United Auto Workers Union after it threatened to amplify its strike at GM’s largest North American plant, potentially affecting nearly 50,000 workers. The union members are likely to see significant double-digit wage increases, which could cost GM about $7B over approximately 4.5 years.
Turbulence in Digital Real Estate Stocks
Tuesday witnessed an unexpected drop in digital real estate stocks such as Zillow (Z), Opendoor (OPEN), and Redfin (RDFN). This occurred following a Missouri jury verdict implicating influential realtor groups and brokerages in collusion to artificially inflate commission rates and ordering them to pay $1.78B in damages.
This verdict presents a potential shift for the business model of real estate within the U.S., sparking a rethink of agent compensation structures.
Doubt Plagues Federal Reserve
Federal Reserve Chair Jerome Powell expressed doubts on Wednesday regarding whether the bank’s hiking cycle has “sufficiently reduced inflation to 2% over time.” Despite these concerns, the stock market responded positively, while bond yields continued to decrease.
Tumble in Apple’s Stock
Despite surpassing earnings expectations and reporting strong performance in their services business along with a 3% increase in iPhone sales, Apple (AAPL) saw its shares drop by 3.4%, ending at $171.60 on Thursday after four consecutive quarters of revenue decline.
Cryptocurrency Fraud Verdict Reached
Sam Bankman-Fried, founder of the now-defunct cryptocurrency exchange FTX, was found guilty on several counts related to fraud and conspiracy. A subsequent appeal is expected, as are potentially decades of incarceration for SBF. The verdict triggered an immediate fall in Bitcoin’s (BTC-USD) value by $1,000, trading at around the $34,000 mark.