Stocks were cautiously higher in the lead up to this afternoon's policy announcement from the Federal Reserve as investors took in the latest batch of earnings reports and a round of mixed economic data. The main indexes only added to their earlier gains after the central bank, as expected, kept interest rates unchanged.
Ahead of the mid-afternoon Fed news, market participants mulled over an onslaught of earnings reports. Most notable were results from chipmaker Advanced Micro Devices (AMD, +9.7%), which disclosed higher-than-expected third-quarter earnings and revenue.
And while the company gave soft fourth-quarter revenue guidance, CEO Lisa Su said on the earnings call that AMD's artificial intelligence (AI) chips could result in $400 million in data center graphics processing unit (GPU) revenue in Q4, and exceed $2 billion in 2024.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Late cycle corrections in a few of AMD's peripheral businesses continue to mask a data center story that is gaining momentum – especially in AI," says UBS Global Research analyst Timothy Arcuri. "AMD remains a top idea and we remain Buy."
Paycom Software (PAYC) was another big post-earnings mover, though shares of the tech stock plunged 38.5%. For its third quarter, the online payrolls and human resources software provider reported a bottom-line beat, but revenue of $406.3 million fell short of analysts' estimates. The company also gave lower-than-anticipated fourth-quarter guidance, saying a broader adoption of its Beti payrolls system is creating cannibalization of other services and unscheduled sales.
"In our view, Paycom has become a transition story and there are challenges looming to reinvigorate its top-line growth since a rebound in the hiring market is unlikely to occur anytime soon given the macro and geopolitical uncertainties and the rate-cycle looks to be ending," says Oppenheimer analyst Brian Schwartz, who downgraded PAYC stock to Perform from Outperform (the equivalents of Hold and Buy, respectively).
Private payrolls come in lower than expected
On the economic front, the Institute for Supply Management said its manufacturing index fell to 46.7 vs economists expectations that it would rise to 49.2. Readings below 50 indicate contraction activity.
Meanwhile, ADP this morning said the U.S. added 113,000 private payrolls in October, below economists estimates for a gain of 130,000. The ADP jobs data is often seen as a precursor to the Labor Department's monthly nonfarm payrolls reports, which will be released this Friday. However, last month, ADP data came in much weaker than expected (89k actual vs 150k estimate), while the government's September jobs report blew forecasts out of the water (336k actual vs 170k estimate).
Stocks keep climbing after Fed announcement
In its November policy statement, the Federal Reserve acknowledged that job gains have "moderated since earlier in the year but remain strong" – a shift from its previous statement that said "job gains have slowed in recent months." However, in his subsequent press conference, Fed Chair Powell said there is more work to be done and that the central bank will keep policy restrictive until it is "confident inflation is on a path" to reach its 2% target.
Wall Street's top minds were quick to chime in after the Fed meeting, including Whitney Watson, global co-head and co-chief investment officer of fixed income and liquidity solutions at Goldman Sachs Asset Management.
While the Fed held steady this time around, "the rise in inflation expectations, owing to higher gas prices, combined with strong economic activity, preserves the prospect of another rate hike," Watson says. "Conversely, a more pronounced economic slowdown caused by the growing impact of higher interest rates might accelerate the timeline for transitioning to rate cuts."
As for the major indexes, the Dow Jones Industrial Average rose 0.7% to 33,274, the S&P 500 gained 1.1% to 4,237, and the Nasdaq Composite added 1.6% to 13,061.
Related content
- When Is the Next CPI Report?
- Kiplinger's Earnings Calendar for This Week (Oct. 30-Nov. 3)
- Biden's New Retirement Adviser Proposal Targets 'Junk Fees'
-
Stock Market Today: Investors Look on the Bright SideA generally good week closes on another positive note, as investors, traders and speculators look for fresh catalysts.
-
My Three-Day Rule for Investing: And If it Applies NowStock Market I've seen a lot in my career. Here's what I see now in the stock market.
-
Stock Market Today: Stocks Climb More Walls of WorryVolatility is back in a normal range, and the trend for the main equity indexes remains positive despite specific and general headwinds.
-
Is It Time to Invest in Europe?Stock Market Europe is being shaken out of its lethargy, militarily and otherwise, by Donald Trump's changes in U.S. policy. Should investors start buying?
-
Stock Market Today: Nasdaq Outperforms as Big Tech RalliesThe Dow Jones Industrial Average closed lower for a second day as Amgen and Merck fell.
-
Stock Market Today: UnitedHealth Drags on Dow After CEO SplitsUNH created headwinds for the price-weighted Dow on news that its embattled CEO, Andrew Witty, is stepping down.
-
Stock Market Today: Dow Gains 1,160 Points on U.S.-China Trade DealThe two countries agreed to a 90-day truce that will give them time to work on more substantive trade negotiations.
-
Stock Market Today: Investors Weigh Weekend NegotiationsInvestors, traders and speculators will look to Switzerland for answers about the most compelling issue confronting global markets.
