S&P 500 forecast after the JOLTS data today

S&P 500 is roughly flat at writing even after the U.S. Bureau of Labour Statistics reported a steep decline in job openings for October.

Labour market seems to be loosening up

That metric stood at 8.73 million last month – down 6.6% and well below 9.4 million that economists had forecast.

Note that the number of monthly job openings has not visited such a low level since March 2021. What it suggests is that the labour market is starting to loosen up. Still, Chris Senyek – the Chief Investment Strategist of Wolfe Research sees weakness ahead for the S&P 500.

Senyek is dovish primarily because the market is “pricing in an immaculate everything scenario” including a soft landing and 150 basis points of rate cuts in 2024.

The benchmark index is currently up 13% versus late October.

S&P 500 could pull back to the 4,250 level

A sharp decline in job openings saw vacancies to available workers ratio down to 1.3:1 in October – versus 2:1 just a few months ago.

But the return of risk appetite to the norm will be a headwind for the U.S. stocks in the coming year, said Chris Senyek in a research note on Tuesday.  

All in all, the Wolfe Research expert warns of a pullback in S&P 500 to the 4,250 level which suggests about an 8.0% downside from here. Earlier this week, JPMorgan also said the benchmark index could revisit the 3,500 level (read more).