Investing.com - Here’s a preview of the top 3 things that could rock markets tomorrow.
1. Jobs Report Will Dominate the Day
The September employment report is clearly the big event for the market tomorrow.
The market recently reminded everyone that rising interest rates aren’t good for stocks. A strong payrolls report, especially if wage growth appears to be in check, could light a fire under yields again and really hit equities.
The Labor Department will release the numbers at 8:30 AM ET (12:30 GMT).
On average, economists expect that nonfarm payrolls rose by 185,000 last month, down from a rise of 201,000 in August. The jobless rate is expected to tick down to 3.8%.
Average hourly earnings are forecast to have risen 0.3% in September, a 2.8% gain year on year.
2. Will Bond Yields Keep Jumping?
The cumulative jump in bond yields drubbed stocks today and the jobs numbers will likely dictate whether they keep rising tomorrow.
Bond price started to drop in earnest this week after some respite in the standoff between Italy and the EU over Italy’s budget eased the flight to safety that was supporting Treasury prices.
A batch of very strong economic numbers, including strong private payroll growth and services activity gave the selloff some momentum. And Fed Chairman Jerome Powell’s indication that the FOMC could move beyond a neutral level for rates was the icing on the cake, leading to anticipation of more rate hikes and pressuring bond prices even more.
The yield on the 10-year topped 3.2% today, a level that it hasn’t seen since 2011.
Bonds underperform in a rising rate environment as the yields on other investments climb and look better in comparison.
But bond guru Bill Gross said the selloff was also caused by a dearth of international buyers.
“Euroland, Japanese previous buyers of 10yr Treasuries have been priced out of market due to changes in hedge costs,” Gross said on Janus Henderson’s twitter account.
3. Tesla and Costco Fall After Hours
Individual issues may be taking a backseat to the macro influence, but there will still be some story stocks to keep an eye on.
Tesla (NASDAQ:TSLA) is still facing a Securities and Exchange Commission investigation over misstatements about production and profitability targets, Fox Business reported, citing SEC sources.
The stock ended down more than 4% following the report and fell further in after-hours trading.
And Costco Wholesale (NASDAQ:COST) fell about 2.5% after hours, despite reporting a profit that matched expectations on sales that were slightly better than forecasts.
Costco said in its earnings report that it identified a “material weakness” in its financial reporting process.
“The weakness relates to general information technology controls in the areas of user access and program change-management over certain information technology systems that support the Company’s financial reporting processes,” Costco said.