Dow Jones, the S&P 500, and Nasdaq price forecast after the October jobs report

Wall Street’s three main indexes advanced on Friday after a mixed jobs report that had lifted hopes of the Federal Reserve shifting to smaller interest rate hikes in the upcoming meetings.

The U.S. added 261,000 jobs in October, which surpassed economists’ estimate of  198,000 for the same month.

On the other side, the unemployment rate climbed to 3.7% from 3.5% in September, and according to the well-established narrative, the rise of optimism in the markets was triggered by the assumption that for the Federal Reserve, rising unemployment could be an argument to revise its hawkish monetary policy and slow down the pace of the interest rate hikes.

The U.S. stock market welcomed the bad news of the rising unemployment, but investors should keep in mind that the U.S. job market confirmed that the economy is still on solid footing; the labor market is moving in the direction desired by the Fed, and the unemployment rate is still not a concern. Pantheon Macroeconomics Chief Economist Ian Shepherdson said:

The bottom line here is that the labor market is softening but has not yet reached the point where the data are screaming at the Fed to stop tightening.

The U.S. central bank delivered a fourth straight 75-basis-point increase in its policy rate this Wednesday and signaled plans to push forward with the tightening cycle.

This was disappointing news for investors who hoped the rate increases so far were working well enough for the U.S. central bank to start talking about a slowdown in rate increases.

Fed Chair Jerome Powell said that the Fed has more work to do, and for now, the upside potential for Wall Street’s three main indexes remains limited.

S&P 500 up 1.36% on Friday

S&P 500 (SPX ) advanced by 1.36% on Friday and closed the week at 3,770 points.

The upside potential still remains limited, but if the price jumps above 3,900 points, the next target could be resistance that stands at 4,000 points.

The important support stands at 3,500 points, and if the price falls below this level, it would be a “sell” signal, and we have the open way to 3,300 points.

DJIA up 1.26% on Friday

The Dow Jones Industrial Average (DJIA) advanced by 1.26% on Friday and closed the week at 32,403 points.

If the price jumps above 32,500 points, the next target could be resistance at 33,000 points.

The current support level stands at 31,000 points, and if the price falls below this level, the next target could be 30,000 points.

Nasdaq Composite up 1.28% on Friday

Nasdaq Composite (COMP) jumped 1.28% on Friday and closed the week at 10,475 points. Despite this, the prospect of a more aggressive monetary policy keeps investors cautious, and the upside potential for Nasdaq Composite remains limited.

The strong support level for Nasdaq Composite stands at 10,000 points, and if the price falls below this level, the next target could be 9,500 points.

Summary

Wall Street’s three main indexes advanced on Friday after a mixed jobs report that had lifted hopes of the Federal Reserve shifting to smaller rate hikes in the upcoming meetings. The market welcomed the bad news of rising unemployment and going forward; the U.S. stock market is going to be hypersensitive to any sort of FED comments.