The US labour market showed signs of a steady slowdown in October, with job openings increasing moderately and layoffs declining, according to the latest Job Openings and Labor Turnover Survey (JOLTS) report released by the Bureau of Labor Statistics on Tuesday. Job openings, a key indicator of labour demand, rose by 372,000 to 7.744 million at the end of October. However, the September figures were revised downward to 7.372 million from the initially reported 7.443 million. Economists polled by Reuters had anticipated 7.475 million vacancies. Labour Market Dynamics While job openings increased, hires dropped by 269,000 to 5.313 million, and layoffs fell by 169,000 to 1.633 million. These figures suggest a gradual cooling of the labour market rather than a sharp contraction. Hurricanes and strikes also impacted October’s labour market data. Rebuilding efforts in storm-affected regions and the resolution of strikes at Boeing and another aerospace company are expected to contribute to a ...
US stocks fluctuated as investors navigated fresh economic data and corporate earnings while preparing for key central bank decisions expected to shape global market trajectories.
After a US$2.3 trillion Nasdaq 100 wipeout, all eyes are on Microsoft Corp’s earnings to see if the tech giant can shift the market sentiment. Concerns persist that tech firms have yet to see returns from substantial investments in artificial intelligence. Microsoft's results will set the stage for upcoming reports from Meta Platforms Inc, Apple Inc, and Amazon.com Inc later in the week, alongside anticipation for the Federal Reserve's decision on Wednesday.
“It’s likely the Fed does signal that looming cut and given the recent pullback, that should help this rebound continue,” said Tom Essaye at The Sevens Report. “However, if the Fed does not signal a September rate cut, markets could get a bit ugly given recent tech weakness, especially if earnings underwhelm.”
Key Takeaways:
Fed's Decision: The Fed is expected to hold benchmark rates at their highest level in over two decades this week, with traders keenly watching for hints of potential policy easing.
Economic Data: US consumer confidence rose in July, and job openings exceeded forecasts, providing an improved outlook for the economy.
Market Performance:
- The S&P 500 hovered around 5,460.
- A gauge of the “Magnificent Seven” megacaps fell 0.5%.
- The Russell 2000 of small caps gained 0.4%.
- Microsoft Azure is investigating reports of connectivity issues globally.
- Advanced Micro Devices Inc climbed ahead of its results.
- PayPal Holdings Inc soared on a bullish outlook.
- Procter & Gamble Co sank on a sales miss.
Treasury and Yen: Treasury 10-year yields remained steady at 4.17%, while the yen weakened as the Bank of Japan began its two-day policy meeting. BOJ governor Kazuo Ueda is expected to outline plans for quantitative tightening and make a decision on the policy interest rate.
Goldman Sachs Forecast: Goldman Sachs CEO David Solomon now sees one or two Fed rate cuts later this year, a shift from his earlier prediction of no rate reductions in 2024. “One or two cuts in the fall seems more likely,” Solomon said, noting the impact of prolonged inflationary pressures on consumer behavior.
Historical Context:
- If the Fed starts a rate reduction cycle, stock bulls have history on their side. Historically, the S&P 500 has risen an average of 5% a year after the first cut following a rate hike cycle, according to CFRA. Additionally, the small-cap Russell 2000 Index has shown an average gain of 3.2% 12 months later.
As the market awaits the Fed's decision and major corporate earnings, investors remain cautiously optimistic about potential signs of economic stabilization and recovery.
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