Nasdaq Index, Dow Jones, S&P 500 News: Stock Futures Up as Job Market Shows Cooling Signs

Highlights

• Stock Futures Up as Job Market Shows Cooling Signs
• U.S. Job Growth Falls Short, Markets Signal Caution
• October Jobs Miss Expectations, Treasury Yields Dip

Labor Market Expansion Slows

In a notable deviation from forecasts, the U.S. economy saw a tempered increase in job creation, adding just 150,000 positions in October, falling short of the Dow Jones projection of 170,000. This underperformance has prompted a reaction from the financial markets, with implications for both equity and bond traders.

Detailed Employment Data

The jobs report detailed a pickup in healthcare and government sector employment, bucking the drag from manufacturing strikes. Average hourly earnings edged up by just 0.2% month-over-month, shy of the 0.3% expected—a key number for those tracking inflation. The tick up in the jobless rate to 3.9%, from the forecasted 3.8%, hints at a potential slowdown in the labor market.

Futures and Yields React

Stock futures reacted positively to the news, with Dow Jones Industrial Average futures climbing 0.3%, mirroring gains in the tech-centric Nasdaq-100 and broader S&P 500 futures. In the bond market, the 2-year Treasury yield fell to 4.912%, with the 10-year Treasury yield also receding to 4.579%, reflecting a growing belief among investors that the Federal Reserve may ease up on its aggressive rate-hiking policy.

Stocks in Focus

Corporate earnings reports catalyzed pre-market movements: Fortinet’s stock suffered a steep drop due to revenue shortfalls, while Block enjoyed a pre-market surge after surpassing earnings expectations. Restaurant Brands International posted a modest gain after earnings exceeded forecasts, although revenues fell below projections.

Short-Term Forecast

While the market’s immediate response has been bullish, underlying caution persists. BCA Research anticipates a brief rally as 2023 closes, but warns of a looming recession in 2024. This forecast aligns with the softening labor demand and a narrowing jobs-workers gap, suggesting that a bearish phase could be on the horizon as the market anticipates an increase in unemployment and a consequential economic contraction.

Technical Analysis

The S&P 500 Index’s current daily price of 4317.79 stands above the previous close, indicating bullish momentum from the last session.

It’s hovering just below the 50-day moving average of 4348.00, suggesting a potential resistance zone. However, with the strong momentum, this could be the trigger point for an acceleration to the upside.

While the price remains above the 200-day moving average at 4245.31, it underscores a longer-term upward trend.

Holding above the 200-day moving average will indicate that investors see value at current price levels, while a surge through the 50-day moving average will indicate that they are buying with conviction.