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Slowest Jobs Report & Market’s Concern

U.S. stock markets closed a little lower on Friday, 8th October 2021, after the jobs report showed growth for September was the slowest this year. 

Non-farm payrolls increased by 194,000 (estimate 500,000) after an upward revision of the 366,000 gain in August.  

The unemployment rate fell to 4.8% and average hourly earnings were higher at 0.6%, the strongest since April. 

The labor force participation rate — a measure of the share of Americans who are employed or looking for work — fell by 0.1 percentage point to 61.6% 

The S&P started the week on a weak note, but buyers on dips found the courage over the next 3 days to push the market higher. 

The positive news that may have caused this rebound was the agreement to extend the debt limit into December, the stronger than expected ADP employment data, and the selloff in gas prices after Putin offered to stabilize global energy markets. 

Here are the closing levels on Friday: – 

 Last Change %Change 
Dow Jones 34,746.25 -8.69 -0.03% 
S&P 500 4391.34  -8.42 -0.19% 
Nasdaq Comp 14579.54 -74.48 -0.51% 
US 10Y 1.612%   
VIX 18.77 -0.77 -3.9% 

The weekend will allow the markets to digest the volatility we have experienced over the last 5 days, taking into account all the news that cause such volatility. 

The debt ceiling will still be a problem in December, since the shortage of global energy remains a concern with winter just around the corner. 

The jobs report was not inspiring, as there were some weak areas in the report that may suggest problems down the line. 

The Federal Reserve could delay its tapering on the back of this weak report, but it is unlikely as they would not want to back track after signaling that they will start soon. Changing their minds would not give confidence to the markets.

While we have held off on making new lows, it may be premature to think that the trend has changed. With the 10-year yield at 1.61%, the big tech stocks may find it hard to keep going higher. Against this background, it is best to be prepared for more volatile days ahead. 

Source: CBOE, Reuters, Bloomberg  

This commentary is written by James Gomes 
James has been in the finance industry for over 30 years and most recently worked for a large US bank for more than 20 years. 

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