FYI: U.S. stocks rallied to end a volatile week, as the September jobs report and continued bets on interest rate cuts helped ease fears about an economic slowdown.
Job growth in the U.S. remains a bright spot, even as signs of weakness mount in the manufacturing and services sectors. Earlier this week investors worried about a potential downturn pushed the S&P 500 down more than 1% in back-to-back sessions for the first time this year.
But the index is now on track to end a rocky week with a modest 0.6% loss after rebounding Thursday and Friday. Stocks were buoyed by expectations that the Federal Reserve will continue to cut rates to shore up the economy and sustain the current expansion.
Investors are betting the Fed will slash rates as soon as October, and Friday’s jobs report did little to alter those views. Even though the U.S. economy has been more resilient than others around the world, surveys of manufacturing and service-sector activity have hinted at future weakness that could eventually trickle into the labor market.
The S&P lurched higher 1.42% Friday on broad-based gains, which accelerated later in the session. Only the index’s energy sector traded lower on the session. The Dow Jones Industrial Average added 371 points, 1.42%. The Nasdaq Composite advanced 1.40%. The S&P 500 and Dow remained on track for their third consecutive week of losses, while the Nasdaq turned positive for the week.
Among the concerning reports that rattled markets this week: U.S. factory activity contracted for a second straight month and hit a 10-year low and the pace of growth in the services sector slowed as well.
Investors’ reliance on the Fed as a backstop was on display Thursday, when the Institute for Supply Management said its nonmanufacturing index hit a three-year low. Stocks initially dropped sharply, but then swung higher as investors ramped up bets that the Fed will slash rates again this year after two cuts in the third quarter.
Traders are betting on a roughly 42% chance of the central bank lowering its benchmark short-term interest rate two more times by the end of the year, according to the CME Group, up from 20% last week.
Friday’s jobs report showed the economy added 136,000 jobs in September, slightly missing estimates of 140,000 jobs. But the jobless rate dropped to 3.5% from 3.7% in August, marking a 50-year low.
Elsewhere, the Stoxx Europe 600 added 0.7%, after suffering heavy losses earlier in the week. Japan’s Nikkei gained 0.3%. And Hong Kong’s Hang Seng dropped 1.1% after the city’s chief executive said a ban would be implemented on wearing masks at public gatherings, with penalties of up to a year in jail and a fine.
Stock markets in mainland China were closed.
Regards,
Ted
Bloomberg Evening Briefing:
https://www.bloomberg.com/news/articles/2019-10-04/your-evening-briefingMarketWatch:
https://www.marketwatch.com/story/dow-set-to-open-lower-in-turbulent-week-as-wall-street-awaits-crucial-september-jobs-report-2019-10-04/printWSJ:
https://www.wsj.com/articles/global-stocks-pause-ahead-of-jobs-report-11570177046Bloomberg:
https://www.bloomberg.com/news/articles/2019-10-03/asia-stocks-to-edge-higher-treasuries-climb-markets-wrap?srnd=premiumIBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-surges-300-points-stocks-rally-time-to-buy-apple/CNBC:
https://www.cnbc.com/2019/10/04/dow-futures-nonfarm-payrolls-due-october-report.htmlReuters:
https://uk.reuters.com/article/us-usa-stocks/sp-500-dow-headed-for-best-day-in-a-month-after-goldilocks-jobs-data-idUKKBN1WJ1CBU.K:
https://uk.reuters.com/article/uk-britain-stocks/ftse-100-snatches-gains-at-the-end-of-its-worst-week-in-a-year-idUKKBN1WJ0OMEurope:
https://www.reuters.com/article/us-europe-stocks/u-s-data-lifts-european-shares-but-they-log-worst-week-in-one-year-idUSKBN1WJ0PRAsia:
https://www.cnbc.com/2019/10/04/asia-markets-october-4-us-payrolls-global-economy-currencies.htmlBonds:
https://www.cnbc.com/2019/10/04/treasury-yields-cautious-ahead-of-nonfarm-payrolls.htmlCurrencies:
https://www.cnbc.com/2019/10/04/forex-markets-us-economy-in-focus.htmlOil
https://www.cnbc.com/2019/10/04/oil-markets-global-economy-in-focus.htmlGold:
https://www.cnbc.com/2019/10/04/gold-markets-us-economy-in-focus.htmlWSJ: Markets At A Glance:
https://markets.wsj.com/usMajor ETFs % Change:
https://www.barchart.com/etfs-funds/etf-monitorSPDR's Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-trackerSPDR's Bloomberg Sector Performance Pie Chart:
https://www.bloomberg.com/markets/sectorsCurrent Futures:
https://finviz.com/fut 
Comments
Wonder how well folks are doing on income and quality of life compared to than? It’s likely impossible to compare. But in Michigan, the UAW workers were happy in ‘69. Those were great years. 2-worker families could make $60,000+ in one of the Detroit or Flint “shops” (with overtime) as the guys called them. Unfortunately, they were largely turning out trash that fell apart quickly - and allowed the foreign makers to gain ground here. On that $60,000+ many auto worker families could afford second homes in the northern part of the state and also own and drive a pretty mean set of wheels. So it goes.
Re: Today’s markets - Miners had a good day - for a change. Outpaced the small bump up in gold. And energy finally had a decent up day. I’ll read all the above links later on today. Hopefully one covers the HK rioting which spilled over into Asian share prices overnight.
*Corrected the number. It was about a decade later after some serious inflation, that a couple might earn $70,000 or more in the auto workplace.
Yes. Lots of manufacturing then in the U.S., with little automation and the 5 or so other jobs created by large manufacturing.
ALSO, for 1964,65,66,67 and 1968; 1.5 MILLION young ones were pulled from any civilian work force number by the military draft. In addition, many of the ladies were still not in the workforce and folks did pass away at a somewhat younger age then, opening work positions.
Wonder if the math was different then to calculate the unemployment numbers ???
I.E., participation rate, etc.
Just some trivia.