U.S. stock futures rose on Friday as investors digested key monthly jobs data that showed employment in the U.S. economy remained strong. The Middle East crisis and the resumption of work at U.S. ports also remained in the spotlight.
S&P 500 futures (ES=F) rose 0.5%, and Dow Jones Industrial Average futures (YM=F) rose about 0.3%. Contracts in the tech-heavy Nasdaq 100 (NQ=F) rose 0.7%.
September’s jobs report was much better than expected, as the U.S. economy added 254,000 jobs last month and the unemployment rate fell to 4.1%. Overall, the report showed that the labor market remains strong despite signs of cooling. Yahoo Finance’s Josh Schafer has more details on the report here.
Following the employment report, bets were tilted towards the US Federal Reserve (Fed)’s slight interest rate cut next month. According to the CME FedWatch tool, more than 90% of stakes received a 0.25% cut instead of the larger 0.50% cut.
Read more: How Fed Rate Cuts Affect Bank Accounts, CDs, Loans, and Credit Cards
Despite a tough week of alarming news, markets are showing some resilience, with stocks attempting to recoup weekly losses. Major indexes were down less than 1% as of Thursday’s close, with the S&P 500 and Dow Jones Industrial Average still within striking distance of all-time highs.
In recent days, a major port strike, damage from Hurricane Helen, and the prospect of broader Middle East conflict have raised prices and potentially fueled inflation.
In a welcome move, the US longshoremen’s strike ended late Thursday after a tentative pay deal was agreed, but several issues remain unresolved until later this year.
On the downside, concerns about the Middle East continued, with Israel’s barrage of attacks on Beirut pushing up oil prices. As investors wait to see if Israel attacks Iranian oil facilities, Western leaders warn of “uncontrollable escalation” and President Biden says the attack is under discussion .
Amid rising tensions, oil prices have posted their biggest weekly rise in two years. Brent crude oil futures (BZ=F) and West Texas Intermediate (CL=F) futures rose more than 1% on Friday morning, bucking the previous day’s 5% rise.
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Friday, October 4, 2024 6:07 a.m. (Pacific Daylight Time)
Markets are starting to factor in a reduction in Federal Reserve monetary policy following strong employment data
Markets are leaning toward pricing in a smaller rate cut by the U.S. Federal Reserve in 2024 after September’s employment report was much better than expected.
Following the report, markets are pricing in a roughly 10% chance that the Fed will cut interest rates by 0.5 percentage points in November, down from a 53% chance a week ago, according to the CME FedWatch tool.
Robert Sockin, senior global economist at Citi, told Yahoo Finance that the Fed is moving forward with the same “urgency” it had at its September meeting, when it cut interest rates by 0.5 percentage point after the better-than-expected jobs report. He said he was less likely to take action. .
“This puts the Fed in a pretty tight corner,” he said, adding that it’s unclear whether the Fed will cut rates by another 50 basis points this year.
“Given the strength of the labor market evident in the September jobs report, the real debate at the Fed is not to ease monetary policy in the first place,” Paul Ashworth, chief North American economist at Capital Economics, said in a note to clients on Friday. It should be a question of whether or not to do so.” “Hopes for a (50 basis point) rate cut are long gone.”
Friday, October 4, 2024, 5:50 a.m. (Pacific Daylight Time)
September employment report shows US economy adding 254,000 jobs, unemployment rate falling to 4.1%, crushing expectations
The U.S. labor market added far more jobs than expected in September, but the unemployment rate unexpectedly fell, reflecting much stronger job market conditions than Wall Street expected.
Labor market payrolls rose by 254,000 people in September, more than the 150,000 that economists expected, according to Bureau of Labor Statistics data released Friday.
Meanwhile, the unemployment rate fell to 4.1% from 4.2% in August. The number of new hires in September exceeded August’s revised figure of 159,000.
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