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Consumer Confidence Sends Dow Jones to New High, FTSE 100 Reaches Highest Level Since Before the Pandemic & Facebook’s Q3 Disappoints

Dow Jones records new high, as consumer confidence rebounds

The blue-chip Dow Jones rallied to a record high earlier in Tuesday’s session, as consumer confidence in the United States unexpectedly rebounded.

Figures from the Conference Board reported that its consumer confidence index climbed to 113.8 in October, after finishing at 109.8 September.

Today’s reading ends three consecutive months of declines and surpasses market expectations for a drop to 108.3.

💡 How to interpret CCI (Consumer Confidence Index)
The CCI is prepared by The Conference Board and was first calculated and benchmarked in 1985. This value is adjusted monthly based on the results of a household survey of consumers’ opinions on current conditions and future economic expectations.

Opinions on current conditions make up 40% of the index, with expectations of future conditions comprising the remaining 60%

Manufacturers, retailers, banks and the government monitor changes in the CCI to factor in the data in their decision-making processes. While index changes of less than 5% are often dismissed as inconsequential, moves of 5% or more often indicate a change in the economy’s direction.

Gold prices dropped on the news, with XAUUSD hitting an intraday low of $1,782, after opening the session trading at $1,807.

In addition to the Dow Jones, the S&P 500 was also trading marginally higher as of writing.

FTSE 100 climbs to highest since February 2020

The FTSE 100 in the United Kingdom was also higher in Tuesday’s session, climbing to its highest level since the start of the pandemic.

Today’s rally comes as Finance Minister Rishi Sunak prepares to reveal the nation’s Autumn budget on Wednesday.

Many will be looking to see what Sunak will do, especially as Brits head into the winter with energy prices at elevated levels.

💡 Rising costs of energy
The cap on prices, which went up earlier this month for households in England, Scotland and Wales, is due to be reviewed again next April, with the expectation that it will climb further. Even if wholesale gas prices were to drop significantly from now, the extra costs that suppliers have had to shoulder in the last couple of months means a steep rise in household bills in April is inevitable.

When the price cap was increased on 1 October, about 15 million households faced a 12% rise in energy bills.

In addition to this, inflation expectations amongst Brits rose to 4.4% in October, up 0.3% from the month before.

This is the highest rate of expectation for inflation since 2008, during the height of the financial crisis.

Despite this, there is continued optimism that the BOE will act in order to calm markets.

Facebook revenue fails to meet expectations

Facebook shares were trading lower today, as the company reported its Q3 earnings after yesterday’s closing bell.

The tech giant reported revenue for the quarter came in at $29.01 billion versus expectations of $29.57 billion.

One positive however was earnings, which beat forecasts, coming in at $3.22 per share, better than the expected sum of $3.19. 

💡 Facebook’s future investments
In Facebook’s press release, the company CFO mentions plans to increase investments for Facebook’s new technology ‘metaverse’ division which will be named Facebook Reality Labs, or FRL. With an Initial Investment of $10 Billion, the plans to increase investments throughout the next few years confirms the intent to make FRL a long-term strategy.

Despite predicting that year-over-year non-ad revenue will drop in the 4th quarter (because of last-years launch of Quest 2). Q3’s non-ad revenue increased 193% YOY.

In addition to this, the company stated it was focusing more on a younger audience, with CEO Mark Zuckerberg stating that, “Over the last decade as the audience that uses our apps has expanded so much and we focus on serving everyone, our services have gotten dialled to be the best for the most people who use them rather than specifically for young adults”.

The company aims to invest more in developing its “reel” based content, in a bid to compete further with TikTok in attracting the 18 – 29 age group.

As of writing, $FB was trading 5.08% lower.

Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.

– Ed Seykota

Eliman Dambell

Senior Market Analyst