The first few trading days in October were eventful as the nonfarm payroll reports were released on Wednesday and Friday. According to the ADP report, there were 143,000 jobs added to the economy in September compared to an expected 124,000. However, that number paled in comparison to the figure released on Friday.
According to the Bureau of Labor Statistics (BLS), there were 254,000 jobs added to the economy in September compared to an expected 147,000. The jobs figures for July and August were also revised higher. Furthermore, it was reported on Friday morning that the unemployment rate had dropped to 4.1 percent while average earnings on a monthly basis increased by .4 percent.
The unemployment rate had been expected to remain steady at 4.2 percent while the average hourly earnings were expected to be just .3 percent. While these figures have caused some to question whether the Fed needs to continue cutting rates in the future, the market believes that additional cuts are still coming. The current bet is that the Fed eases by 25 basis points in November while also easing another 25 basis points in December.
This would bring the key rate down to a range of 4 percent to 4.5 percent and would put the Fed about 100 basis points from what the market sees as a neutral rate. The main argument made by proponents of rate cuts is that the Fed needs to be proactive to guard against shocks that might be caused by geopolitical or other events.
There was other important news released over the past few days. On Monday, Fed Chair Jerome Powell spoke at an event in Nashville and said that further rate cuts will be data-dependent. He also said that there was no hurry to continue cutting and that the economy was projected to remain strong.
On Tuesday, the Job Openings and Labor Turnover Survey (JOLTS) was released, and it revealed that there were 8.04 million openings in the United States. This was compared to an expected 7.64 million openings. Also, the ISM Manufacturing PMI came in at 47.2 compared to an expected 47.6, which indicates that manufacturing is still in a period of contracting demand.
On Thursday, the ISM Services PMI came in at 54.7 compared to an expected 51.7. This continues a trend in which manufacturing demand is contained while demand for services keeps growing. Unemployment claims figures for the past seven days were also released the same morning and found that there were 225,000 requests for benefits compared to an anticipated 222,000.
The S&P 500 was mostly flat for the week finishing up .31 percent to close at 5,751. It made its high of the week on Monday afternoon hitting 5,760 before reversing and making a low of 5,680 on Thursday. The index turned higher on Friday after the nonfarm payroll report was released.
The Dow was also flat this week, finishing up .37 percent to close at 42,352. The market would close at the high of the week and made its low of 41,908 on Thursday afternoon.
Finally, the Nasdaq was up .2 percent for the week to close at 18,137. The weekly high of 18,153 was hit at the open on Tuesday while the weekly low of 17,797 was also hit on Tuesday morning.
In international news, the Swiss government reported on Thursday morning that inflation was down .3 percent on a monthly basis. On Monday night, Australia reported that retail sales were up .7 percent monthly, compared to an expected .4 percent.
On Wednesday, the meeting minutes from the September FOMC gathering will be released. This will give investors greater insight into what the committee is thinking going forward. Thursday, inflation data will be made public, and it’s expected that the inflation rate will fall to 2.3 percent on an annualized basis. On Friday, price data is set to be released with prices expected to have increased .1 percent over the past month.