Record Layoffs in October and Market Reactions

On Wednesday, U.S. stock markets exhibited a fluctuating trend, as concerns regarding technology giants affected the markets, and private employment data indicated that October was a challenging month for layoffs.

The S&P 500 and Dow Jones Industrial Average remained nearly stable, while the technology-heavy Nasdaq Composite Index lost more than 0.1% in value. A report published by global outplacement firm Challenger, Gray & Christmas revealed that layoffs announced in October 2023 reached the highest level since 2003. The report noted that companies have been cutting some positions to reduce costs, that pandemic-era hiring was being reduced, and that plans for artificial intelligence were being made.

Last month, employers announced 153,074 layoffs, while in October 2024, this number was recorded as 55,597.

Investors are trying to decipher mixed signals about whether technology valuations are excessive. Chipmaker Qualcomm (QCOM), despite providing strong earnings and positive guidance, saw its stock value drop by around 3% in pre-market trading. In contrast, shares of chip designer Arm (ARM) rose by 6% due to the impact of artificial intelligence demand.

Additionally, the shareholder meeting for Tesla (TSLA) is of critical importance; the meeting is expected to start at 4 PM. A vote regarding CEO Elon Musk's proposed trillion-dollar compensation package is the main agenda item. If this plan is rejected, the possibility of Musk stepping down from his CEO position has caused concern among investors.

The market is also considering some skeptical comments from Supreme Court justices about the legality of Trump's broad trade tariffs. Treasury Secretary Scott Bessent stated he is "very, very optimistic" regarding this matter. If a decision comes against this policy, tariffs could be reversed, which would have a significant impact on international trade.

Wall Street is also calculating the consequences of flight capacity being reduced by 10% at 40 airports due to the federal government shutdown. This situation has emerged as a measure to ensure passenger safety, given that air traffic control workers have not been paid for over a month. Canceled flights, combined with existing delays, are causing passengers to face long queues and delays.

Among stock gains, Warner Bros. Discovery (WBD), Airbnb (ABNB), and Moderna (MRNA) stand out. Major airlines began to reduce the strong gains they achieved on Wednesday following Transportation Secretary Sean Duffy's announcement that the U.S. would cut flight capacity by 10%.

In particular, Delta Air Lines (DAL) and Southwest Airlines (LUV) lost more than 0.7% in pre-market trading, while United Airlines Holdings (UAL) dropped 1.4%, and JetBlue Airways (JBLU) fell by 0.4%. These four airlines had gained more than 5% on Wednesday.

This measure, to be implemented by the Department of Transportation in the coming days, is expected to affect many major airports. However, Duffy indicated that international flights would not be affected.

The government shutdown is the longest in U.S. history and has caused chaos at airports, exposing passengers to long waiting times and delays. U.S. airlines were informed on Wednesday evening that they needed to reduce flights by 4% on Friday and by an additional 5% on Saturday.

Last month, the number of layoffs reached the highest level since 2003.