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

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.

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

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

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.