Decline of Factory Orders by 3.6% in October

• In October, there was a 3.6% decrease in factory orders compared to the previous month.
• Excluding transportation, factory orders experienced a 1.2% decline.
• Following the report's publication, the S&P 500 moved downwards towards its lowest point of the session.

On December 4, the U.S. revealed the Factory Orders report for October, signaling a 3.6% month-over-month decline in factory orders, which was higher than the analyst consensus of -2.8%.

Excluding transportation, factory orders also declined by 1.2%, contrary to the anticipated growth of 0.3% as forecasted by analysts.

The FedWatch Tool indicates a 99.7% probability that the Federal Reserve will maintain the federal funds rate at the upcoming meeting on December 13. Market anticipation for rate cuts in the first half of the next year is already underway.

Traders are foreseeing a federal funds rate cut to 500 – 525 basis points at the March meeting, with the expectation that it will reach 400 – 425 basis points by the end of 2024.

The impact of the Factory Orders report on the Fed's policy outlook at this juncture is not expected to be significant. Although recent Purchasing Managers' Index (PMI) reports have reflected pressure on the manufacturing sector, the general economy is projected to maintain a relatively stable condition.

The U.S. Dollar Index persists in its efforts to establish itself above the resistance level at 103.50 – 103.75. Treasury yields are on the rise, contributing to the support of the U.S. dollar.

Gold suffered a retracement, falling towards the $2050 level amid a volatile trading session. While the price of gold surged above $2100, it failed to maintain momentum as traders quickly capitalized on profits.

Following the release of the Factory Orders report, the SP500 retreated towards session lows near the 4560 level. It is apparent that significant positive catalysts are required for the SP500 to secure a position above the 4600 level.