What Friday's Jobs Report Means for Stocks. Investors Shouldn't Expect a Break From the Market Whiplash, Say Strategists

U.S. stocks kicked off the fourth quarter with strong back-to-back gains earlier this week, with the $S&P 500 index(.SPX.US)$ jumping more than 5.7% off its 2022 low, helping investors claw back some of its crushing 9.3% loss in September.

However, strategists warn the strong rally to start the quarter doesn't mean investors are out of the woods yet, particularly with Friday's employment report for September likely to offer important guidance to the Federal Reserve at its next policy meeting in early November.

Lindsey Bell, chief markets and money strategist at Ally, thinks the data may offer a glimpse of the short-term direction for equities. Friday's employment report is expected to show the economy added 275,000 jobs for the month, compared with 315,000 new positions added in August, according to a survey polled by Dow Jones.

"The expectation is that the report will be goldilocks in nature -- not too hot and not too cold.


-Bell wrote in a note on Tuesday, adding that the jobs data will need to be in line with, or short of expectations, in order for the stock market to continue higher.

Brian Mulberry, client portfolio manager at Zacks Investment Management, sees equity prices being volatile if we get a "really strong jobs report," which may have a negative impact on stock prices. "Too many people making too much money, [means they] keep spending money. That keeps prices high, and that means, ultimately, interest rates will be higher for longer," said Mulberry via phone on Wednesday.

Investor would want to see a monthly decline, with more jobs lost in the economy each month, but "we're not seeing that materialize yet," according to Mulberry. As a result, the economy is getting to the target Fed fund rate quicker than previously thought because "we're not having a job erosion that we want to see."

Job openings in the U.S. fell sharply in August to a 13-month low of 10.1 million, the Labor Department said on Tuesday, a sign the red-hot labor market might be cooling off a bit as high inflation and rapidly rising interest rates start to rattle the economy. On Monday, the Institute for Supply Management said its closely watched manufacturing index fell to a 28-month low of 50.9% in September, its lowest level in more than two years.


However, Bell explained that the weak economic data doesn't necessarily mean the central bank will become less aggressive with its interest rate hiking plans, in a follow up interview with MarketWatch.

"Investors are viewing that as a little bit of a relief, though I don't know that you can read into it that it's going to lead to the Fed making a pivot or pausing policy at their next meeting. I think there's still a lot to be determined before they make that call.


-Bell said via phone.


U.S. stocks finished lower on Thursday with the $Dow Jones Industrial Average(.DJI.US)$ shedding 1.1%, while the S&P 500 off 1% and the $Nasdaq Composite Index(.IXIC.US)$ declining by 0.7%.

-Isabel Wang




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  • PagRobinson
    ·2022-10-07
    TOP
    The rise is short-lived. And the decline seems never to end.
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    • gogostocks
      OK
      2022-10-08
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    • valuebay
      likely
      2022-10-08
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    • PC21
      [Glance]
      2022-10-07
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  • boonk
    ·2022-10-08
    TOP
    when will Santa Claus rally come?
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    • Kabanotolog
      о да, скорей бы
      2022-10-08
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    • ldmmc
      6
      2022-10-08
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  • MoonJin
    ·2022-10-08
    caution is the key.
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    • Chitz
      yes
      2022-10-09
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  • JC888
    ·2022-10-08
    Report out on Fri usa time 8:30am. Jod demand still high...
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  • GerryLoh
    ·2022-10-08
    good sharing thanks
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    • mmcjb92
      6
      2022-10-08
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  • jat
    ·2022-10-08
    End of day it's still inflation & interest rates.Most powerful man in the world is indeed Jerome Powell no need for nuclear weapons he jus need to speak [Facepalm]. mouth more powerful than guns [LOL]
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    • huaer8497
      🚀🚀🚀
      2022-10-08
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  • Mccoy
    ·2022-10-09
    I think Friday’s drop is an over reaction. But in thr short term, market is still very weak and any negative news will send the market plunging.
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  • All in Tesla
    ·2022-10-08
    Unemployment rate is low 😮
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  • RedpillBluep
    ·2022-10-09
    hm, interesting 🤔, thanks for sharing ☺️
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  • liewtc60
    ·2022-10-09
    Good news on the economy remains bad news for Wall Street🤞
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  • Kai kung
    ·2022-10-09
    after COVID lockdown and shutdown, Labour force is  required/needed back for reopening until the year end. Next year will see a reverse trend.
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  • wingcheong
    ·2022-10-09
    Thanks for sharing.
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  • jimstocker
    ·2022-10-09
    Nice to know about it. thanks
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    • Dirui
      K
      2022-10-09
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  • Tangen
    ·2022-10-09
    Great article! I would like to share it.
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  • Matrix Rev
    ·2022-10-09
    wait for more rate hike
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  • Lynn098
    ·2022-10-09
    Market will likely continue with its down trend until the next Fed meeting
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  • lowmy
    ·2022-10-09
    The stock rout this time feels worse than the Lehman Brothers crisis
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  • JJZ
    ·2022-10-10
    It does not look good in the coming week.
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  • Jasonloh
    ·2022-10-09
    like pls
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  • jethro
    ·2022-10-09
    thanks for the share
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