Stocks closed higher on Friday, but mostly lower for the week. It was the second down week in a row for the Dow, the S&P 500 and the mid-cap S&P 400. The first for the Nasdaq. But the small-cap Russell 2000 eked out a small gain for the week.

Friday's Employment Situation report by the Bureau of Labor Statistics (BLS) was definitely a surprise. Especially after Wednesday's ADP employment report, which estimated a sharp increase in private payrolls last month (233K vs. last month's 159K and views for 115K). Instead, the BLS report showed only 12,000 new jobs were created last month (-28,000 in the private sector and 40,000 in the public sector), vs. the consensus for 125,000 (90,000 private and 35,000 public). The unemployment rate was unchanged at 4.1%, in line with last month and views for the same. The participation rate slipped to 62.6% vs. last month's 62.7%. And average hourly earnings came in at 4.0% y/y vs. last month's 3.9% and estimates for 4.0%.

While October's numbers were impacted by Hurricanes Helene and Milton, as well as the Boeing strike (and others), those events were likely reflected in the estimates going into the report. So, while the lower numbers in general can partially be explained away by those events, the excess weakness was definitely a shock. And nobody was expecting a loss in private payrolls. Additionally, August and September tallies were both revised lower as well with August shedding -81,000, bringing the total down to 78,000 from 159,000. And September was revised down by -31,000 to 223,000 from 254,000.

In the private sector, Healthcare added 52,000 jobs in October, and Construction was up 8,000. But Professional and Business Services lost -49,000, and Manufacturing declined by -46,000.

Friday's positive market reaction suggested that bad news might have been considered good news in that the weaker job readings support the idea that the Fed should cut interest rates by another 25 basis points on Thursday, 11/7 when they make their FOMC Announcement.

In other news, Friday's PMI Manufacturing report improved to 48.5 vs. last month's 47.3.

The ISM Manufacturing report slipped to 46.5 vs. last month's 47.2.

And Construction Spending rose 0.1% m/m vs. last month's upwardly revised 0.1% (from -0.1%) and views for 0.1%. On a y/y basis it came in at 4.6% vs. last month's upwardly revised 4.8% (from 4.1%).

We've got a busy week of earnings this week with 1,609 companies on deck to report.

Additionally, it was reported that NVIDIA will be added to the Dow Jones Industrial Average on Friday morning (11/8, before the open), replacing Intel. Sherwin-Williams will also be added to the Dow Jones, which replaces chemical company Dow, Inc.

But the main event this week will be Thursday's FOMC meeting. Maybe not so much for the widely expected rate cut, but for indications on what the Fed sees for December's FOMC meeting.

Let's also not forget tomorrow's election. While I don't see it having much of an impact on the market for the rest of the year, regardless of who wins, there could be some extra volatility if there are any unusual happenings or delays.

Q4, historically speaking, remains the best quarter of the year for stocks. And that includes Presidential election years. In fact, Presidential election years are the second-best year of the 4-year Presidential cycle, so I expect a strong finish to an already strong year.

See you tomorrow,