Wall turns bearish despite US jobs data

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LAST UPDATE: 20.09

Wall Street’s main indexes were lower on Friday, despite an initial uptick on the back of U.S. jobs data that came in line with forecasts and appeared to allay fears that an overly buoyant job market would lead to federal central bank of the USA (Federal Reserve) to an even more aggressive rate hike than planned in order to tame galloping inflation.

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On the board, the industrialist Dow Jones loses 76.59 units or 0.24%, with the broadest S&P 500 to record a drop of 12.85 points or 0.33%, while the technological Nasdaq recording losses of 69.75 points or 0.59%.

According to Steve Sosnick, chief strategist at Interactive Brokers, when it comes to the labor market, the data shows “no overheating, no freezing in the economy. The situation is consistent with forecasts. There is nothing in the data that takes off the table a rate hike of 75 basis points”.

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He notes that “data that is within the forecasts does not change anything in the scenario. Hence we see a relief rally”.

The next big stop on the macro front is the announcement of the US consumer price index for August on September 13, which is expected to determine how aggressively the Fed will move.

The August labor market data is considered particularly important as it is among the last macroeconomic data reports the Fed will weigh before making its decisions in September on the size of a rate hike, with the two most likely scenarios being an increase of 75 m.p. (from the 2.25-2.50% range to 3% to 3.25%) or an increase of 50 bp. (ie at 2.75% to 3%).

The Dow and S&P 500 snapped their four-day losing streak on Thursday, kicking off a historically negative September for markets on a positive note.

The indices are on track for a third straight weekly decline, following their plunge in late August.

A drag on stocks are the continuous and fairly consistent statements by Fed officials that investors should not expect the central bank’s monetary tightening cycle to end anytime soon. Thus, traders are watching to see if the indices will retest the July lows, especially given the bad track record that the current month carries with it from the WWII era to the present.

Shares of retailer Lululemon jumped about 7% after reporting results that beat analysts’ estimates.

Among the 30 Dow stocks, 9 are moving with a positive sign and 21 with a negative sign. The profits are led by those of Chevron, Salesforce, Walgreens Boots Alliance, while of the losses those of 3M, Dow Inc., Intel.

USA: The economy added another 315,000 jobs in August, unemployment at 3.7%

The U.S. economy continued to add new jobs in August, although the pace slowed compared to the previous month, while wages continued to move upward, government data released today showed.

In particular, jobs in the economy increased by 315,000 last month, after the rise of 526,000 jobs in July, as the US Department of Labor announced today. July’s reading was revised slightly lower than the original figure of 528,000.

The unemployment rate, meanwhile, rose to 3.7% from 3.5% as the labor force participation rate strengthened. The participation rate climbed to 62.4% from 62.1%.

The average estimate of analysts in a Bloomberg poll was for 300,000 jobs, with unemployment remaining at 3.5%.

Hourly wages rose 0.3% in August to $32.36, with overall growth over the past year reaching 5.2%, among the biggest increases since the early 1980s.

The latest data belies concerns that the slowing economy and fears of an impending recession will lead US businesses to freeze new hires.

The data also appears to pave the way for the US Federal Reserve to raise interest rates again in September.

The strong job market is easing concerns about the risk of a recession, allowing the Fed to raise interest rates further to rein in the highest inflation in 40 years. Analysts, however, warn that with successive and large increases in interest rates, the risk of recession increases.

Source: Capital

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