U.S. stock buyers had a better day on Friday. After Thursday’s selling tied to concerns over AI revenues, all five major indices finished higher, with the Dow leading the percentage gains.
The economic news was less encouraging. U.S. consumer sentiment disappointed while inflation expectations edged higher. Canada lost another 68,300 jobs, pushing the Canadian dollar lower. Nevertheless, stocks, precious metals and Bitcoin all advanced into the weekend.
Dollar mixed; Canadian dollar hurt by employment report
The dollar finished mixed. It was strongest against the Canadian dollar and Japanese yen, gaining about 0.25% against each, and weakest against the Australian dollar.
The late-session snapshot of the major currency pairs showed:
EURUSD: 1.1201, −0.07%.
USDJPY: 158.26, +0.25%.
GBPUSD: 1.3233, +0.07%.
USDCHF: 0.8300, −0.17%.
USDCAD: 1.4261, +0.25%.
AUDUSD: 0.6985, +0.43%.
NZDUSD: 0.5613, +0.05%.
USDCAD jumped from around 1.4232 before the Canadian employment report to near 1.4293 afterward. Some of that gain was retraced, but the Canadian dollar remained under pressure.
Treasury curve flattens
Treasury yields were mixed near the close, with shorter maturities moving higher while the 30-year yield edged lower:
2-year: 4.7911%, +3.51 basis points.
5-year: 5.0211%, +3.01 basis points.
10-year: 5.2441%, +1.11 basis points.
30-year: 5.6001%, −0.69 basis point.
That combination flattened the curve. The rise in near-term inflation expectations gave traders another reason to remain cautious about the inflation outlook, even with consumer sentiment weakening.
U.S. stocks finish higher
The major indices closed higher across the board:
Dow industrial average: 51,660.18, +423.06 points or +0.83%.
S&P 500: 7,811.54, +46.18 points or +0.59%.
Nasdaq Composite: 27,366.17, +172.83 points or +0.64%.
Russell 2000: 2,806.9815, +12.8535 points or +0.46%.
Nasdaq 100: 30,883.15, +157.34 points or +0.51%.
The rebound extended beyond technology, with the Dow outperforming and small caps also participating. Still, one positive session does not remove the questions surrounding AI spending, revenues and valuations.
In Adam’s afternoon review, he highlighted that Thursday’s OpenAI revenue comparison required an adjustment for partner revenue. He also noted that the dollar fell alongside AI shares during the initial reaction—an unusual response for a currency that often benefits when risk assets decline. That relationship bears watching.
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European stocks also finished Friday higher:
Germany’s DAX: 25,087.28, +1.13%.
France’s CAC: 7,803.34, +0.95%.
UK’s FTSE 100: 10,552.04, +1.06%.
Spain’s IBEX: 19,033.10, +0.55%.
Italy’s FTSE MIB: 49,746.30, +0.91%.
Friday’s gains were not enough to erase weekly losses in most markets. Italy fell 1.46%, France declined 1.19%, Germany lost 0.57% and Spain slipped 0.27%. The UK bucked the trend with a 0.86% gain. French unrest and fiscal uncertainty remained part of the European backdrop. See the European close review here.
Michigan sentiment falls; inflation expectations rise
The preliminary October University of Michigan consumer sentiment index fell to 46.3 from 48.1, below the 47.8 estimate.
Current conditions were particularly weak at 44.7 versus 51.0 expected. Expectations were better than forecast at 47.3 versus 45.5.
For the Fed, the inflation expectations figures remain the concern:
One-year expectations: 4.7%, up from 4.6%.
Five-year expectations: 3.5%, up from 3.4%.
Consumers are feeling worse, but they are also expecting higher prices. That is an uncomfortable combination for policymakers, but is the fear greater than the reality? The headline was deeply depressed, although it remained above the 44.8 May low cited in the report. Next week, we get CPI and PPI data which combined will help to calculate the PCE.
Canada loses another 68.3K jobs
Canada’s September employment report missed expectations for a 9.2K increase with a sharp decline of 68.3K. Following August’s 41.7K decline, the two-month loss reached 110K.
Full-time employment fell 35,400 and part-time employment declined 32,900. The unemployment rate rose to 6.5% from 6.4%, while participation slipped to 64.8% from 65.0%. The participation decline limited the increase in unemployment.
There were some qualifications to the weak headline. Public-sector employment fell 70,000, while private-sector employment rose 24,100. Education and youth employment declines also raised questions about seasonal adjustments around the return to school.
Nevertheless, another large employment decline is difficult to ignore. Permanent employees’ wage growth also increased to 2.3% from 2.0%, adding a complication for the Bank of Canada.
Oil little changed; Iran remains a weekend risk
WTI crude futures were near $91.50 in the supplied snapshot, up $0.01 or 0.01%.
Earlier relief followed President Trump’s comments that discussions with Iran were productive and that attacks on Tehran would be deferred until after the midterm elections. That helped reduce the immediate escalation premium, but it did not resolve the conflict or the risks to energy supplies.
The afternoon Baker Hughes report showed total U.S. rigs rising by 5 to 603, including a 6-rig increase in oil rigs to 462.
Gold and silver advance
Precious metals posted solid gains in the late-session snapshot:
Spot gold: $4,196.065, +$62.375 or +1.51%.
Silver: $60.7912, +$1.6107 or +2.72%.
Gold advanced despite higher 2-, 5- and 10-year yields. The mixed dollar and slightly lower 30-year yield offered a less uniform headwind, but the strength in metals also suggests demand extended beyond a simple interest-rate trade. Rising inflation expectations may have contributed, although the snapshot alone cannot establish the driver.
Bitcoin edges higher
Bitcoin traded near $82,316, up $640 or 0.78%.
The gain was consistent with the recovery in equities. It was a better day for risk assets, although Bitcoin’s move did not establish a separate trend from broader markets. See the latest technically HERE.
What carries into next week?
Stocks recovered, but inflation concerns and questions over AI economics remain. Canadian employment weakness adds another issue for currency traders, while Middle East headlines retain the potential to change the mood over the weekend.
Monday brings a split holiday session: U.S. stocks will trade normally, the U.S. bond market will be closed, and Canadian markets will close for Thanksgiving. That leaves traders facing potentially thinner conditions as the new week begins. See what’s open and closed here.
This article was written by Greg Michalowski at investinglive.com.
Source: Investing Live - News
