The Dow rallied over 400 points on Friday, but the major indexes finished the week lower as investors were uncertain about how the Federal Reserve would interpret the latest payroll numbers in the October jobs report, and what it means for future interest rate hikes. Cheddar News speaks with Tom Graff, Head of Investments at Facet Wealth, who breaks down the day’s market action. 

Closing Bell

Nasdaq Posts Worst Week Since January

And let's turn back to the major indexes. The dow jumping more than 400 points for the week though, we see the major indexes posting losses, with investors drawing some conflicting conclusions about what the latest jobs numbers mean for future fed rate hikes. So joining me now is tom graff head of investments with facet wealth. Tom thanks so much for coming on the show. What's your reaction to the state of the market? Yeah, well, thanks for having me. Um Look, it's uh, it's kind of a classic um market where we're near a turning point today, as you mentioned, um it was a bit of a mixed jobs report, the labor market remains strong on the top line, but the last couple months it's certainly been a slowdown in hiring generally in the first half of the year we were gaining over 400,000 jobs for a month. Now we're down in the mid 200 area wages have slowed Down a bit. Um and if you look at the unemployment rate you mentioned it rose a little bit according to the household survey, jobs actually declined by about 300,000. So there's something going on here where we might be at some kind of some kind of turning point and I think that's flowing through into the sort of volatility we're seeing in stock, so we're just not sure What direction is right now. Yeah, it was, it was interesting. I mean, even sort of that uncertainty on display in the stock market today Tom Open with decent gains dipped a little bit lower into the red but closed with a nice acceleration into the final minutes of trade here as well, what can we expect these next two months? Of course before the end of the year we'll have another Fed meeting Fed indicating that it could raise rates by another 75 basis points. But it is a seasonally strong time for the stock market. Right. Yeah. I think um I think the next Fed meeting is gonna be an important one. And I also, I certainly think the next couple inflation reads we have are going to be critically important. You know, we've seen a lot of evidence that consumer spending may be slowing down and that's everywhere from the government's retail spending numbers to even things like amazon reporting that they might have their worst holiday season of all time. So um you put that together and you're like, well that that should be a sign that inflation might abate a little bit. Um if consumers aren't spending as much, we haven't quite seen it in the actual inflation data, but a bit worse blowing through. That would open the door to the Fed may be slowing down its pace of rate hikes. So as you mentioned, they hiked 75 basis points for meetings in a row because last time Powell hinted maybe we can slow down the pace a bit as we're getting close to a place where policy is restricted of it enough to bring down inflation and if if the market can finally get some kind of clarity about where the Fed is headed, even if it doesn't mean they're still tightening, but maybe not as aggressively and maybe in a way that's a bit more predictable, I think that would be pretty positive for stocks actually. Okay, so third quarter earnings season still underway tom we've heard from the big tech companies, we've heard from the banks, we've heard from some of the airlines retailers on top here in these next few weeks as well. What's the state of corporate America and how does that impact the stock market? Well, you know, I think, I think it's a tale of kind of two different um kinds of companies, you know, your a lot of your old line industrial companies um are talking about slow down and volume. So we heard that from a lot of transports, um maybe goods aren't shipping as much and that flows into what I was saying earlier about maybe consumers aren't quite spending as much in the tech world. Um I think there's probably been a slowdown in sort of emerging tech spending. We saw um amazon and google, both report weaker cloud sales. We saw google and meta report weaker online ad sales and all that kind of says, well maybe some of the emerging consumer discretionary consumer tech type companies are spending a bit less um on those kinds of things, there were probably a lot of the marginal buyers in those spaces. So now we're gonna get these crucial retailers coming up, if you remember back in the earlier part of the year walmart and target both reported that inventories were grow and that um that really hit their stocks pretty hard. That would be another good sign. We've heard inventories growing, maybe there's a bit more discounting going on, there will be another great sign that maybe we're getting on top of inflation. So I definitely think this next couple weeks where we're hearing some of those retailers is going to be a really important kind of tone setter for the rest of the year. Let's run through the weekly performance as well. Time. Our viewers see on the screen obviously how we closed today, we did see nice gains today in the wake of that better than expected jobs report, but we did end lower for the week. So the S and P shedding 3.3% the dow, losing 1.4%. The NASDAQ underperforming again amid higher rates. And the Fed broadcasting on Wednesday, that those higher rates are here to stay. So the NASDAQ shedding about 5.7% for its worst weekly percentage drop that we've seen since january. Does this continue to be the case? These tech names that are reporting layoffs and hiring freezes at a time when other industries are so desperate to hire workers. Does this narrative remain, you know, it's reminding me a lot of a mini version of what happened after the dot com bust in 4001 period at that time. Um You know, we, everybody sort of knew that there were certain speculative companies that they may go away or they may struggle. Um but the big Cap techs started getting hurt on, you know, they they were a lot of their customers were these more emerging tech companies as those were emerging, that covers were struggling. It wound up with some kind of struggle with the bigger companies. There's a little bit of that going on here and I think, I do think Wall Street sort of sorting out what does that mean? Um I will say, I will say, I think there's a bit of a transition here in the first part of the year. The story with Big Cap tech was overwhelmingly just interest rates are rising and these um evaluations, they were getting the ratio that they were getting wasn't sustainable. Now, I think it's a little bit more out ascertaining what if there is such a slow down in text and then you mentioned layoffs next days and so I'm not sure, but, you know, we're a little cautious on really um kind of really high valuation companies in our portfolio. Um We want to be, I think, I think they could be a little bit more vulnerable if either the economy goes into recession or even just if there is kind of a industry specific recession in the tech world, we don't really don't want to be overweight in either case. Alright. Tom Graff, head of investments with Facet wealth. Tom thanks so much.