U.S. stocks lagged behind the global markets for an international lead-up to a busy week of U.S.-specific and Fed-related events, including monetary policy decisions and Friday’s jobs numbers.
Futures on the S&P 500 ( GSPC) decreased by 0.5% this morning, while futures on the Dow Jones Industrial Average ( DJI) dipped by 150 points, or 0.4%. Contracts on the Nasdaq Composite ( IXIC) decreased by 0.7%. Meanwhile, Treasuries rose for a third consecutive day, holding at 4
The equity markets have been looking up after a devastating September slump. Monthly data shows that the Dow Jones Industrial Average has seen its 10th best month in October – and it’s not over yet! If the Dow closes just 2 points higher on Monday, this October will beat January 1976 as the best month since the 1930s.
Wednesday’s announcement from the Federal Reserve and next Friday’s release of the government’s monthly employment report for October will provide important guidance for the markets.
U.S. central bank officials are poised to raise the Fed’s policy rate by another 0.75%, but some strategists believe it will be their last big move before they start scaling back on tightening plans.
Pantheon Economics’ Chief Economist Ian Shepherdson said with still-high core CPI and payroll gains averaging 372,000 across the third quarter, investor expectations that policymakers will keep raising rates into next year are justified.
Honestly, we can see enough indicators that the economy is just before a plateau while investors are over relying on data which show an upturn.
“We don’t expect Powell’s tone to change significantly this week, but he’ll find himself overwhelmed if the numbers turn,” Shepherdson added.
The Labour Department’s latest jobs report is expected to show monthly job growth at a decrease, likely around 200,000 although still noticeably higher than the pre-pandemic years. Bloomberg economists expect jobs to have been added/created last month by about 190,000.
And on the earnings front, companies are still rolling out their third-quarter results. Of the S&P 500 companies that have reported so far, the net profit margin is 12%. This is below the previous quarter’s & year ago’s margin. However, it’s higher than the 5-year average.
Bank of America analysts said in a report that corporate earnings have continued to defy recession-like predictions, as many metrics are still performing better than what is expected.
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