S&P 500 forecast after the monthly jobs report on Friday

By:
on Sep 1, 2023
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  • Nonfarm payrolls increased by 187,000 in August - well above 170,000 expected.
  • Bank of America strategist Savita Subramaniam shares her view on U.S. stocks.
  • The S&P 500 index is currently down nearly 2.0% versus its year-to-date high.

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S&P 500 is keeping roughly flat on Friday after the U.S. Bureau of Labour Statistics said unemployment last month climbed to its highest level since February 2022.

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Unemployment rate jumped to 3.8% in the U.S.

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Average hourly earnings were also up a less-than-expected 4.3% year-on-year in August reiterating that inflation pressures are indeed cooling off.

Another potential catalyst for the U.S. stocks, as per Savita Subramaniam – a Bank of America strategist, may be earnings that she’s convinced will only improve moving forward.  

Absent a collapse in demand, 2Q likely marks the trough in earnings … favourable seasonal trends suggest limited downside risk to 2023 EPS.

Note that unemployment stood at 3.8% in August and average hourly earnings for the month were up 0.2% versus a 0.3% increase expected.

Nonfarm payrolls grew more than expected

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On Friday, the Bureau of Labour Statistics also reported an increase of 187,000 in nonfarm payrolls for the month – well above 170,000 expected.

Readings for the previous months were downwardly revised. Defending her constructive view on the equities market, BofA strategist Savita Subramaniam added in her research note today:

Macro data is still strong … 2023 expectations have stabilised, revisions turned positive and the global revision ratio is at levels that argue for risk-on, not risk-off.

Wall Street currently forecasts a slight increase in S&P 500 earnings this year and a meaningful acceleration to 12.2% growth in 2024. Katie Stockton of Fairlead Strategies also talked of long-term positive momentum in a CNBC interview this morning.

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