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S&P 500 rallies as blowout jobs report showing easing wages fuel soft landing bets

Published 10/06/2023, 02:47 PM
© Reuters

Investing.com -- The S&P 500 rallied Friday after rebounding from lows as stocks shrugged off rising Treasury yields after data showing stronger-than-expected job gains, but cooling wage gains stoked investor expectations that the economy can avoid a recession.

The S&P 500 rose 1.5%, the Dow Jones Industrial Average rose 1.3%, 417 points, Nasdaq rose 1.7%.

'Goldilocks' jobs report stokes risk appetite

The U.S. economy created 336,000 jobs in September, the Labor Department reported on Friday, well above expectations for 170,000. But the average hourly earnings unexpectedly slowed to 0.2% for the month and 4.2% on annualized basis in September, easing fears about a tight labor market boosting wages and inflation.

The unemployment rate remained unchanged at 3.8%, compared with expectations for 3.7%.

"The silver lining is that we didn't see a lot of kick up in wages because that is ultimately what will affect costs and drive-up inflation" Randy Krozner, former Fed governor told Bloomberg in an interview Friday following the jobs report.

Others agree, with Scotiabank economics saying in a Friday note “what the FOMC may focus upon more than jobs is the fact that average hourly earnings have hit a new soft patch in Goldilocks fashion.”

Treasury yields give up some gains, but remain near highs on Fed hike bets

Treasury yields retreated from session highs, but upside was supported by growing bets on another Federal Reserve rate hike by the end of year ticked higher.

The 10-Year Treasury yield was up by 6.5 basis points at 4.779% after hitting a high of 4.892%, while the yield on the 2-year Treasury climbed by 6.3 basis points to 5.088% after hitting high of 5.151%.

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Odds for a December rate hike jumped to nearly 40% on Friday from about 31% a day earlier, according to the Investing.com's Fed Rate Monitor Tool.

Big tech, chips leads markets higher

Tech rallied nearly 2% pushing the broader market higher, underpinned by Apple Inc (NASDAQ:AAPL), Alphabet Inc Class A (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META) and Microsoft Corporation (NASDAQ:MSFT).

Chip stocks, up 2%, were also involved in the heavy lifting even as some on Wall Street see the potential for further U.S. bans on exports of AI-enabling semiconductors and related equipment to China, weighing on the sector.

Nvidia, Marvell, and Intel are among several companies that could face additional restrictions on exports of chips, according to Barclays.

Levi slips on guidance cut

Levi Strauss & Co Class A (NYSE:LEVI) fell 1% after cutting its full-year sales guidance to a range of 0% to +1% versus 1.5% to 2.5% previously and reported third-quarter revenue that fell short of analyst estimates as ongoing slump in its wholesale business weighed.

Levi also detailed plans to cut further costs and step up the growth of its direct to consumer business.

But this will likely be offset be offset by “ongoing pressures in US wholesale, and risk that a tough global consumer macro backdrop could weigh on LEVI’s ability to deliver consensus revenue growth rates in 2024, Goldman Sachs said after reducing its price target to $13 from $14.

Latest comments

bs .. investing articles .. trash at each writing
This is 'no landing' not soft landing.
Thats not what you published 3 hours ago...
"Blowout jobs report with easing wages"...let me translate that for you, people are taking low wage and part time positions to try and pay their bills since they are in record debt and there is massive inflation.
Well would you look at that.  A Friday "rally" that whisks away the entire weeks worth of losses.  How convenient.  And notice that completely uninhibited chart.  Miraculously absent are the wild gyrations seen with every loss.  And further, isn't it just magical that the laughingstock of the investing world isn't selling off "in late trade?"  Yesterday, the days entire loss magically vanished, but today, the "rally" extends right through the close.  It's no wonder why global investors consider the US Ponzi Scheme the  BIGGEST INVESTMENT JOKE IN THE WORLD.
Bond yields way up today indicating another rate hike is coming. Ignore reality at your own risk.
By Monday, reality will sink in. More people working for less money during an inflationary period is not good. Stock market is still in a downturn.
This exact same thing happened not even a month ago. Market pumped after job report, then massively dumped due to "fed fears". There is no actual economic growth, just inflation.
US holiday on Monday
Have any of these "financial news" organizations reported on the breakdown of the jobs in terms of how many are full time positions versus how many position are simply part time/seasonal positions and government positions? Many businesses are cutting back on full time employees and shifting to part time to reduce benefit obligations. Government jobs do not produce revenue or increase GDP.
Quality jobs are more important than quantity: people are losing high paying jobs for lower paying jobs, meaning the affordability crunch will hit ER more and more each quarter, as seen in recent trends. Higher rates for longer will cause the system to break sooner than later - the longer it takes, the worse it will be. Good luck!
Next week: "The White House announced today that they recently hired 336,000 part time Santas for the Holiday season using taxpayer money"
up until this year I really thought shortages of stuff existed but when I saw oil at 90 something dollars a barrel and retailing gas at 315 I learned it's all bs The price is whatever they say it is not what it should be
@Paul: Yoz full of snit.
Anybody concerned that while debt is at record levels and savings accounts and 401k's have seen the greatest outflows in decades, mortgage rates are now at 8% with home sales declining? As people stop being able to afford to buy and afford homes, housing market will collapse. The average US household is having to pay over $10,000 more per year for the same goods/services just due to inflation.
*since Biden took office
Now that I have two jobs, I can finally use the wage I earn from the first job to afford the gas to get to my second job, and then I can afford to pay half of my mortgage, which is now at 8%!
A "blowout jobs report" with higher than target inflation numbers would not lead to a "soft landing" at all. It would be as soft of a landing as the comments that the inflation being "transitory". Headlines today "Market ignores Fed fears after jobs report", headlines next week "Market continues to see largest losses since 2008 as Fed fears return"
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