Stocks soared following the blockbuster September jobs report, with the strong Friday rally helping indexes reverse previous losses and notch their fourth consecutive week of gains. The S&P 500 (SPX) gained 0.22% for the week, and the Dow Jones Industrial Average (DJIA) inched up by 0.09%. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) were up by 0.10% and 0.13%, respectively.
After the Federal Reserve’s jumbo cut in September, market participants debated the size of the next interest-rate reduction, with traders seeing even chances between a 0.25% and a 0.50% cut. However, odds of another jumbo cut tumbled to near zero after data showed that the U.S. economy added 254,000 jobs in September, the most in six months and almost twice the expected new payroll amount. In addition to the blockbuster headline, labor data was better than expected across the board, with the unemployment rate falling to 4.1% and wages rising more than was projected. Moreover, July and August job growth numbers were upwardly revised, as was August wage growth.
These numbers not only underscore the continued resilience of the job market but increase the odds that the economy will continue to grow above trend in the current quarter. Although the jobs data diminished hopes for a larger interest-rate reduction, the numbers lifted risk sentiment that had been under pressure beforehand. Investors view a strong economy as better for the stock markets, as larger cuts would signify economic weakening.
Three Economic Events
Here are three economic events that could affect your portfolio this week. For a full listing of additional economic events, check out the TipRanks Economic Calendar.
CPI and CPI ex. Food and Energy (Core CPI) – Thursday, 10/10 – The CPI report is one of the two key indicators used to measure inflation (the second one is the Personal Consumption Expenditures, or PCE). Policymakers, businesses, and consumers closely watch the CPI report, as it reflects the price trends in the economy, shapes consumer spending and business outlook, and directly affects the Federal Reserve’s policy rate decisions.
» September’s Producer Price Index (PPI) – Friday, 10/11 – This report reflects input prices for producers and manufacturers. Since PPI measures the costs of producing consumer goods – directly affecting retail pricing – PPI is seen as a telling pre-indicator of inflationary pressures. This makes it a leading indicator for the following month’s CPI. Thus, the PPI directly impacts the overall inflation outlook among policymakers.
» September’s Michigan Consumer Sentiment Index and UoM 5-year Consumer Inflation Expectations (preliminary readings) – Friday, 10/11 – These reports portray the results of a monthly survey of consumer confidence levels and consumers’ views of long-term inflation in the United States. The level of confidence affects consumer spending, which contributes about 70% of the U.S. GDP. The inflation expectations index is used as a component of the Fed’s Index of Inflation Expectations calculations.
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