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.
Unemployment rate declined in September
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
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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