Steady Underway - Markets Chart a Resilient Course

The week left a mixed picture for the United States, with conflicting signals in the economy, a positive tone in corporate markets, and significant developments in politics and trade. On the economic front, concerns grew in the labor market after it was revealed that corporate layoffs reached their highest level in 22 years in October, with more than 153,000 job cuts linked to post-pandemic adjustments and increasing automation associated with advances in artificial intelligence. This could foreshadow further weakness in sectors such as technology, warehousing, and food. However, the ADP private employment report provided some relief by showing the creation of 42,000 jobs, exceeding expectations and breaking the weakening trend observed since the middle of the year.

Activity indicators showed a contrast. The ISM services PMI rebounded to 52.4, its best level since February, driven by higher new orders and improved business activity, while S&P indices also reflected steady expansion in both services and the composite indicator. In contrast, the ISM manufacturing PMI fell to 48.7, remaining in contractionary territory for the eighth consecutive month and highlighting the persistent weakness of the industrial sector. At the same time, consumer sentiment deteriorated again: the University of Michigan confidence index fell to 50.3 in November, its lowest level since 2022, amid heightened economic concerns.

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