fnews.si

Markets · · 3 min read

Election Week: Five Days, Four Catalysts, and What Each Could Move

The US midterms land in the same week as Apple earnings, two central bank decisions abroad and the October jobs report. A day-by-day guide to what matters and why.

By the fnews.si editors

Markets head into the first week of November on a weak footing. Technology stocks led a sharp sell-off last week as investors balked at the cost of the AI build-out, and oil is above $100 a barrel. Into that backdrop comes a crowded calendar. Here’s what’s scheduled and how each event could matter.

Monday, November 2: Apple and the factory floor

  • Apple reports after the close. It’s this year’s best performer among the largest tech stocks, up about 28%, partly because it has spent far less on AI data centres than its peers. The question is whether its restraint keeps being rewarded. Bank of America removed Apple from its US best-ideas list, flagging possible pressure on profit margins from a staggered iPhone launch.
  • ISM Manufacturing for October gives an early read on how factories are coping with higher energy and input costs.

Tuesday, November 3: the midterms

All 435 House seats and 35 Senate seats are on the ballot. Polls and prediction markets suggest Democrats have a real chance of winning both chambers.

Why it could matter for markets is policy direction for specific sectors more than the overall economy. Analysts have flagged a possible shift toward lower defence spending, more pressure on drug pricing, and new rules for data centres if control of Congress changes. Those are sector stories, not index stories.

The election may also matter for oil. Public talk of renewed US action against Iran has been tied to after the vote, which makes the following days a geopolitical watch point.

A note on history: the Stock Trader’s Almanac finds the Dow has gained an average of 2.8% over the eight trading days around midterm elections, going back to 1934. November has also historically been a strong month in midterm years. Treat this with caution. Averages over a few dozen elections hide wide variation, and none of those years had this particular mix of rising rates, an oil shock and a tech sell-off. Historical seasonality is a weak reason to buy or sell. (See reading financial headlines critically.)

Tuesday also brings AMD and Super Micro earnings, both direct beneficiaries of AI spending, plus the September JOLTS job-openings report.

Wednesday, November 4: services and chips

  • ISM Services. Services are most of the US economy, so this is the bigger of the two business surveys.
  • ADP private payrolls, an imperfect preview of Friday.
  • Qualcomm and Arm earnings round out the chip-sector picture.

Thursday, November 5: the Bank of England

The Bank of England faces the same dilemma the Fed and the Bank of Canada wrestled with last week: whether to raise rates against an energy shock. A hike would confirm that central banks are moving in the same direction globally. US third-quarter productivity figures also land Thursday. Strong productivity growth lets wages rise without fuelling inflation.

Friday, November 6: the jobs report

This may be the most important release of the week for interest rates. FactSet’s consensus is for about 55,000 jobs added in October, with unemployment steady at 4.2%. September’s figure was revised down to just 29,000.

The reaction depends on which way it surprises:

  • Strong jobs, steady wages: makes a December Fed hike more likely. Short-term yields rise, and pressure on growth stocks increases.
  • Weak jobs: sharpens the Fed’s dilemma between high inflation and a cooling labour market. Bonds would likely rally, and talk of “stagflation” would grow.

(Our guide to reading the jobs report explains why revisions and the unemployment rate can matter as much as the headline number.)

How to think about a week like this

Weeks with many catalysts tempt investors to trade around each event. The odds are poor: you have to be right about both the outcome and the market’s reaction, and the second is often surprising. Positioning matters too. After a sell-off, a merely “not bad” result can spark a rally. If you have a long-term plan, a busy week is a reason to watch, not necessarily to act.

The one thing worth doing is checking that your portfolio could tolerate the plausible range of outcomes. Those include higher rates for longer, oil swinging sharply in either direction, and continued volatility in the largest tech stocks.