‘No one wants to be aggressively bullish’ before new labor data coming Friday, analyst says
Stocks were unable to continue Wednesday’s rally because investors were awaiting a key jobs report coming Friday, said Edward Moya, senior market analyst at Oanda.
He said investors were purposefully pulling back ahead of non-farm payroll data coming in the morning. Investors will also be watching for data on hourly pay and the unemployment rate.
“US stocks were unable to hold onto earlier gains as Wall Street digested a swath of economic data that showed inflation is easing and the labor market is cooling,” Moya said. “It’s been a nice rally but no one wants to be aggressively bullish heading into the NFP report.”
Investors will be looking for the right, middle-ground data, said Megan Horneman, chief investing officer at Verdence Capital Advisors. That means it’s weak enough to show interest rate hikes are having the intended impact of economic contracting, while being strong enough to signal a recession could be avoided.
“A big number will spook the markets further that the Fed’s not going to be able to slow down their pace of rate hikes,” said Megan Horneman, chief investing officer at Verdence Capital Advisors, of Friday’s jobs data.
With “a so-so number, I think the markets can maybe rally on that,” she added. “But if you get a really weak number, it’s just going to spook investors after such a strong rally we’ve seen in November.”
Indexes are coming off a winning month
Thursday marked the first day of a new trading month as the market came off a winning November.
The S&P 500 give Dow each had the second straight month of gains, rising 5.38% and 5.67%, respectively. That monthly streak was the first for each since August 2021.
The Nasdaq Composite gained 4.37%, which was its second positive month in a row. That was the first time the tech-heavy index started a streak since it saw three straight months of wins ending with December 2021.
Key inflation indicator rose less than expected in October
The Bureau of Economic Analysts reported that the Core Personal Consumption Expenditures Index, a key gauge of inflation, rose 0.2% in October. That’s less than the Dow Jones expected increase of 0.3%.
Following the report, Treasury yields declined amid optimism over inflation easing.
— Fred Imbert