Stocks Surge Following Robust Jobs Report:
Despite a turbulent week, stocks managed to rebound on Friday.
Over the last month, The Dow Jones Industrial Average returned –3.11%, while the Standard & Poor’s 500 returned –3.35%. The Nasdaq Composite index returned –3.02%.
Source: Charles Schwab & Co, Inc.
Friday Rally: A Strong Finish
Stocks surged on Friday following an employment report that exceeded Wall Street’s expectations. Initially, fears of potential rate hikes by the Federal Reserve caused a spike in bond yields and led to significant early morning losses. However, a retreat in yields prompted a turnaround as investors shifted their focus to the month’s moderate wage growth. This positive shift in sentiment contributed to a strong finish for the market.
Stocks were shaky for much of last week on rising bond yields. When Treasury yields hit their highest level since 2007 on Tuesday, stock prices dropped, leaving the Dow Industrials in negative territory for the year. The catalyst for the day’s spike in interest rates was a surprisingly strong JOLTS (Job Openings and Labor Turnover Survey) showing nearly one million more open jobs than investors had expected.1
Jobs
The job market continues to display remarkable resilience. August JOLTS showed job openings exceeded 9.6 million, above the consensus estimate of 8.8 million. A weak Automated Data Processing (ADP) private payroll job growth (released Wednesday) that showed 89,000 new private sector jobs appeared to be an outlier compared to the other reports.2,3
Friday’s monthly employment report showed a robust gain of 336,000 new jobs, nearly double the consensus forecast of 170,000. At the same time, the previous two months saw significant upward revisions of 119,000 (combined) from initial reports. Wage gains rose modestly, coming in below expectations and striking a hopeful note on inflation.4
This Week: Key Economic Data
Source: Bloomberg Finance L.P.
This Week: Companies Reporting Earnings
Source: EarningsWhispers
At Concord Asset Management, we design portfolios for the long run, with the ability to navigate various market cycles. However, you can have confidence that we are monitoring these market-moving events, and we will make reasonable, tactical adjustments as necessary.
Author
Gary Aiken
Chief Investment Officer
Concord Asset Management
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1. CNBC, October 3, 2023
2. CNBC, October 3, 2023
3. CNBC, October 4, 2023
4. CNBC, October 6, 2023
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