Markets Shrug off Huge Jobs Report but War Breaks Out in the Middle East -Oct 6 Market Recap
Indices
- Dow 33,407, -100 or -0.29%.
- Nasdaq 13,431, +212 or +1.60%.
- MSCI EAFE 1993.63, -37.63 or -1.85%.
- S&P 4,308, +20 or +0.46%.
- USD10Y 4.784%, +21.1bp or +4.61%.
- WTI Crude $82.81/bbl, -$7.98 or -8.79%.
Markets Shrug off Huge Jobs Report
On Tuesday, the market sold off sharply on a strong Job Openings and Labor Turnover Survey that showed about a million more job openings than what was expected. That JOLTS report was prescient as Friday’s Non-Farm payroll report was gang busters at nearly double the estimate of 170,000, coming in at 336,000. However, unlike Tuesday, the market rallied strongly due to the market’s relief that rumors of the economy’s demise are premature as well as the fact that average hourly wages increased less than estimates at +0.2% vs +0.3% expected. Average hourly earnings are an important data point for the Fed with regard to how they view inflation.
But War Breaks Out in the Middle East.
On Saturday, Hamas militants launched a coordinated and sophisticated attack on Israel, killing several hundred civilians and taking both civilian hostages and military prisoners. Israel has responded by declaring war. At the time of this writing, Dow futures are only down –0.61%, however, with the U.S. sending a carrier group to the area and a historically volatile and complex history amongst the protagonists, this conflict could explode across the region at any time. Expect the rally in bond yields to slow down if not reverse completely as some investors flee to safety.
Next Week
Q3 earnings kick off this week with consumer defensive giant, PepsiCo (PEP) reporting on Tuesday. Thursday sees the first airline, Delta (DAL), report. Finally on Friday, the big banks report, led by JP Morgan Chase (JPM), Wells Fargo (WFC), Citibank (C), and asset management behemoth, BlackRock (BLK). The economic data calendar is also full; the September Producer Price and Consumer Price Indices will bring more insight into the current inflation situation and the minutes of the September FOMC meeting will be released.
Economic Calendar
- Monday – N/A.
- Tuesday – N/A. Earnings: PepsiCo (PEP).
- Wednesday – September Producer Price Index (PPI). September FOMC minutes.
- Thursday – Initial Jobless Claims. September Consumer Price Index (CPI). Earnings: Delta Air (DAL).
- Friday – October preliminary Consumer Sentiment. Earnings: JPMorgan Chase (JPM), Wells Fargo (WFC), BlackRock (BLK), Citigroup (C).
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Oct 6 Daily Trading Recap…
Monday – Dow -74 to 33,433, Nasdaq +88 to 13,307, S&P +0 to 4,288, USD10Y +11.0bp to 4.683%.
- Eight of eleven S&P sectors traded down, led lower by Utilities, Energy, and Real Estate.
- September final U.S. S&P Manufacturing PMI was slightly better than last month at 49.8 vs 48.9.
- September ISM Manufacturing Index also ticked higher to 49% vs 48% expected and vs 47.6% last month.
Tuesday – Dow -431 to 33,002, Nasdaq -248 to 13,059, S&P -58 to 4,229, USD10Y +11.9bp to 4.802%.
- Ten of eleven S&P sectors traded down, led lower by Consumer Discretionary, Real Estate, and Technology.
- August Job Openings and Labor Turnover Survey ticked up sharply at 9.8 million job openings vs 8.8 million expected and 8.9 million last month.
- Yields on the 10-yr U.S. Treasury bond surged another 2.5% today on the hot JOLTS number. A better and more accurate indicator awaits us on Friday with the Non-Farm Payrolls report.
Wednesday – Dow +127 to 33,129, Nasdaq +176 to 13,236, S&P +34 to 4,263, USD10Y -6.7bp to 4.735%
- Nine of eleven S&P sectors traded higher today, led by Consumer Discretionary, Communication Services, and Technology.
- September ADP Employment was 89,000 much lower than the 160,000 expected and vs last month’s 180,000 print.
- September Final U.S. S&P Services PMI was 50.1 vs 50.2 expected and vs last month’s print of 50.2.
- September ISM Services Index was 53.6% vs 53.7% expected and vs last month’s 54.5% print.
Thursday – Dow -10 to 33,119, Nasdaq -16 to 13,219, S&P -5 to 4,258, USD10Y –1.8bp to 4.717%.
- Seven of eleven S&P sectors traded down today, led lower by Consumer Staples, Materials, and Industrials.
- Jobless claims rose slightly to 207,000 vs 210,000 forecast and last week’s slightly revised higher print of 205,000 (originally 204,000).
Friday – Dow +288 to 33,407, Nasdaq +211 to 13,431, S&P +50 to 4,308, USD10Y +6.7bp to 4.784%.
- Ten of eleven S&P sectors traded up, led by Technology, Communication Services, and Utilities.
- September Non-Farm Payrolls blew out expectations of 170,000 new jobs, nearly doubling the estimate at 336,000.
- The September unemployment rate was unchanged from last month at 3.8% and a tenth of a percent higher than expected.
- September hourly wages were also unchanged from last month at +0.2% and lower than the +0.3% estimate.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, and TSLA.