NASDAQ 100, Dow Jones, S&P 500 News: Job Report Could Set the Course for November’s FOMC Meeting

Highlights

• Market cautiously optimistic with U.S. stock futures up ahead of crucial jobs report.
• Economists forecast 170,000 new jobs, slight unemployment dip to 3.7%.
• Mixed signals: Goldman Sachs and Citigroup bullish on jobs, ADP report casts doubts.
• Fed’s next move hinges on jobs data, with a mere 19.6% market expectation for a rate hike.

Market Awaits Jobs Data as Rate Hike Looms

U.S. stock futures are up in the pre-market session on Friday, but the real focus is today’s job report and its potential impact on interest rates. Economists are betting on 170,000 new jobs and a slight drop in unemployment to 3.7%. However, with the Federal Open Market Committee’s (FOMC) next meeting scheduled for November 1, the markets are pricing in a minimal 19.6% chance of a rate hike.

At 10:29 GMT, blue chip Dow futures are trading 33385.00, up 81.00 or +0.24%. Benchmark S&P 500 Index futures are at 4301.50, up 10.75 or +0.25% and tech-weighted Nasdaq Composite futures are trading 14902.50, up 40.75 or +0.27%.

Mixed Signals from Wall Street

Investor sentiment has been a seesaw with varying forecasts from major financial firms. While Goldman Sachs and Citigroup are expecting significant job growth, around 200,000 and 240,000 respectively, ADP’s recent report of just 89,000 new private payrolls in September has cast a shadow. Furthermore, lower weekly jobless claims imply that employers aren’t rushing to cut back staff, at least for now.

What the Fed is Watching

The Federal Reserve’s decisions largely hinge on labor market conditions. A strong report could reinforce the belief that the labor market is resilient but slowing down. This would add pressure on the Federal Reserve to keep interest rates elevated, stoking fears of economic turmoil. On the flip side, softer data might calm the volatile bond market which saw the 10-year U.S. Treasury yield rise to a 16-year high this week.

Impact on Equities

It’s not just the bond market feeling the heat. Stocks are also taking a hit. The Dow is down 1.16% for the year, the S&P 500 has been in the red for five consecutive weeks, and the Nasdaq is barely breaking even. All eyes are on the labor force participation and average hourly earnings, expected to increase by 0.3%.

What’s Next: The Short-Term Forecast

The jobs report due today could serve as a tipping point for the markets in the near term. A bullish outcome, with job numbers exceeding expectations, could push the Federal Reserve to consider a rate hike, thereby pressuring equities and sustaining high bond yields. Conversely, a bearish report may offer some relief to traders by reducing the odds of a rate hike, potentially stabilizing both the stock and bond markets.

In summary, traders and investors alike are on high alert, closely watching today’s jobs data. Depending on the outcome, the market could see a significant shift in direction, either supporting or bucking current trends. With stakes this high, expect market volatility to continue until a clearer economic picture emerges.

Technical Analysis

Based on the provided data for the Dow Jones Industrial Average, the current Daily price of 33119.58 is trading below both the 200-Day moving average of 33799.95 and the 50-Day moving average of 34552.40. This positions the market in a bearish zone, as it signifies a potential downtrend in the short to medium term.

The emphasis on moving averages is crucial. The slight dip from the previous Daily price of 33129.56 adds to the bearish sentiment. Given these indicators, the current market sentiment leans toward being bearish.