US stocks logged its longest losing streak since 1980 – just minutes before the market closed on Friday and the S&P 500 market bellwether reversed direction.
With just one working day to go (Monday) before American goes to the polls to deliver an historic verdict – the first woman head of state Hillary Clinton or the underdog candidate Donald Trump – markets registered their own verdict, one of panic.
In what is a cliff-hanger, as both leading candidates are neck-and-neck rather than actually leading, it was left to the US non-farm payrolls data to instill some cheer into a worried market this session.
That only worked temporarily, as 161,000 jobs were created in October – less than forecast – but the September figure was significantly upsized too. It helped the S&P 500 market bellwether avert a ninth successive session of falls, until a few minutes to the closing bell.
But the jobs data is twin-edged going into election week, as it also brings closer to the prospect of a December rate hike, now standing at over 80%, according to Fed funds rate readings.
The S&P 500 index closed down 0.2% at 2,085.
Fuelling that sense of unease about the looming election, was a report from analysts at Citigroup.
A Donald Trump win could spark an immediate sell-off in the region of 5% for the S&P 500, according to analysts at Citi, who also warned on slower growth or even recession for the United States.
A survey run in September by the US investment bank showed Wall Street strongly believes Hillary Clinton is set to clinch victory in next week's vote but the poor performance of US equity markets in the wake of last Friday's news of the latest FBI probe into the Democratic candidate's emails, shows concerns of a Trump win are mounting.
But the bank made clear there was a short-term risk – the shock of the underdog victor Trump causing a 5% adjustment to the market – and a long-term hit.
"A Trump win risks slower growth or recession if trade is restricted and fiscal expansion plans curtailed. Uncertainty alone could hit the economy. Global growth will also be impacted if uncertainty rises, US growth is hit and US financial conditions tighten,” Citi said in its research note.
But the S&P 400 index closed up 0.2% at 1478, while the S&P Smallcap 600 advanced by 0.5% to 707.
The wider small-cap Russell 2000 also finished 0.6% higher, at 1163.
Across the border in Toronto, the top stocks index TSX Composite was in tandem with Wall Street’s S&P 500, and ended 0.5% lower at 14,509.
Early trading
US shares opened higher on Friday, powered higher by a buoyant jobs report which helped avert the risk of making it a ninth day of losses for the bourse – which would take the market back to a time few traders can actually say they spent on the open outcry floor.
The US economy added 161,000 jobs in October, compared with Wall Street expectations of 173,000, according to the non-farm payrolls report. Although not a stellar number September job growth was revised higher to 191,000 from an initial reading of 156,000. It also points to a greater chance of the Fed hiking rates in December – unless Donald Trump wins the presidency next week. The Fed funds rate is pricing in more than a 80% chance of a hike in mid-December.
The S&P 500 market bellwether was up 0.3% at 2095. On Wednesday, a seventh successive session of losses made it the longest losing streak since 2011. On Thursday more losses made it the longest since 2008 when the financial credit crisis was at its worst. A ninth day on Friday would take the ticker’s slope down to the longest since 1980 - not be a great way to see in the weekend.
Although the jobs report offered cheer, the oil price didn’t. The US oil benchmark West Texas Intermediate was down 0.5% to $44.42, but earlier dipped to $43.57, for the first time since September 20 amid growing scepticism over OPEC’s ability to implement the preliminary agreement reached last month to cut production among the world’s major producers by the end of this month.
But it was an energy stock which headlined the gainers on the S&P 500 as NRG Energy (NYSE:NRG) rose by 10% to $11.14 after forecast-beating third quarter earnings.
Meanwhile, the S&P Midcap 400 was up 0.6% at 1485 and led by fashion house Fossil Group (NASDAQ:FOSL) up 7.6% to $26.58 after it delivered better-than-expected earnings in the third quarter of fiscal 2016, but sales marginally lagged the Zacks Consensus Estimate.
The S&P SMallcap 600 was up 0.8% at 709 and led by transportation group Bristow (NYSE:BRS) up 20.8% to $12.31 after its second quarter earnings cheered investors.
The US election was also a factor in the day’s trading. It is unusual for traders or investors to interfere in or display political affiliations, but such is the interest around next week’s White House race that one fund manager, Charles Schwab, has published its findings among its own investors.
A survey of Charles Schwab’s investors showed that nearly half, and possibly some Republicans, planned to vote for Democrat rival Hillary Clinton. The survey showed that 28% of investors identified themselves with the Democrats, 31% Republican and 33% Independent. Around 8% supported others or declined to say.
But 46% said they would be voting for Clinton, 28% Trump, 10% for independent candidates and 16% either don’t know or preferred not to say.
Pre-Open
Wall Street shares are poised to open higher, after sliding Thursday, as the US posted solid jobs data and more earnings reports are in focus.
We are now on the last leg of the race for the Whitehouse with the election in just four days' time, and it continues to be a close-run thing.
Reportedly, a poll showed over 80% of voters saying the 18-month long campaign between Clinton and Trump has left them repulsed, rather than excited.
Official figures this morning - the last jobs data before the vote - show the US economy added 161,000 jobs last month (October) - a good gain but still but below the 191,000 jobs of September.
The unemployment rate declined a bit - to hit 4.9%.
This week the Fed left interest rates on 'hold' but the general feeling is rates will be raised in December, but it may depend on the outcome of Tuesday.
Yesterday, the Dow Jones closed down over 28 to 17,930, the S&P 500 lost over nine points at 2,088, while the Nasdaq exchange lost 47 to 5,058.
The S&P 500 has fallen for eight straight days, making this the longest losing streak since October 2008.
In futures today, the Dow Jones is up 11 points; the Nasdaq is ahead by almost five and the S&P500 is up by over three points.
Among the earnings reports, Warren Buffett, aka the 'Sage of Omaha' and his investment company Berkshire Hathaway (NYSE: BRKB) is reporting after the bell.