Here’s what the U.S. monthly jobs report means for the S&P 500

By:
on Oct 7, 2022
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  • U.S. Bureau of Labour Statistics published its monthly jobs report on Friday.
  • Veritas Financial's Greg Branch shared what he sees next for the U.S. stocks.
  • The S&P 500 index is down about 2.0% on the economic news this morning.

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S&P 500 is down 2.0% on Friday even after the Bureau of Labour Statistics said the U.S. economy added fewer-than-expected jobs in September.

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Unemployment rate declined in September

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Economists had forecast the nonfarm payrolls to climb by 275,000 but employers ended up adding 263,000 only. On the flip side, though, unemployment rate stood at 3.5% versus 3.7% expected, suggesting the Fed has to do more to slow the economy.

Consequently, the S&P 500 lost 2.0% this morning. Sharing what the economic news means for the benchmark index, Greg Branch – Managing Partner at Veritas Financial Group said:

There’s been increasing talks of a Fed pivot, just like we saw in the summer, and at some point, they will, but between here and there, there’s a lot of pain and lot of work they’ll do. Inflation is their foremost priority.

S&P 500 is currently up 2.0% from its low on September 30th.  

U.S. stocks have not bottomed yet

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Last month, the U.S. Federal Reserve signalled a terminal rate of 4.6% in 2023 and agreed the probability of a “soft landing” was rather slim as Invezz reported here.

According to Branch, that’s a tell the U.S. stock have not bottomed yet. On CNBC’s “Worldwide Exchange”, he said:

I don’t think we’ve seen the bottom for 2022 yet, particularly as we’re in early stages of quantitative tightening, as Q4 and 2023 earnings remain too high and need to go a similar downward revision cycle as we saw for Q3.

Also on Friday, average hourly earnings in September were reported up 5.0% on year-over-year basis – well above the pre-COVID norm.  

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