FYI: U.S. stocks gained Friday after the August jobs report showed hiring slowed in a month racked by trade threats, likely keeping the Federal Reserve on track to cut interest rates again later this month.
The report underscored the delicate balance facing markets in recent months. Investors are on one hand deeply uneasy about signs economies around the world are slowing. Any threats to growth, be it from rising tariffs to political instability, can send markets reeling.
On the other hand, signs of slowdown are often met with central bank interference, such as the Fed cutting short-term interest rates—a boon for shares of U.S. companies.
Investors wrestled with those competing dynamics Friday, sending the Dow Jones Industrial Average up 0.26% . The S&P 500 rose 0.9%, while the Nasdaq Composite lost 0.17%.
The U.S. added 130,000 jobs in August, slightly short of the 150,000 projected by economists surveyed by The Wall Street Journal. The unemployment rate, as expected, remained at 3.7%.
Investors watch the Labor Department data closely for signs of economic health, and August’s jobs figures took on even more importance heading into the Federal Reserve’s meeting later this month.
U.S. stocks maintained gains as Fed Chairman Jerome Powell spoke in Zurich. In his speech, he gave little push back against expectations that the Fed is gearing up to cut interest rates again. He also said the U.S. economy faces a favorable trade outlook and global slowdown risks, and the Fed is “not forecasting or expecting a recession.”
The jobs report didn’t do much to alter traders’ expectations for Fed rate cuts. Federal-funds futures point to the market pricing in a 92% chance of the Fed lowering its benchmark rate by 25 basis points at its meeting later this month, just a hair lower than Thursday’s 95%, according to CME Group. Market expectations for a 50-basis point cut remain at zero—unchanged over the past week.
Government bond yields slipped after the jobs data, with the yield on the benchmark 10-year note at 1.543%, versus 1.604% ahead of the report.
The employment data comes on the heels of a rally in stock markets around the globe. The S&P 500 is on pace for a 1.9% gain for the week and is less than 2% away from its July record. Including Friday’s gain, the index is up six of the past seven trading sessions.
Tuesday’s Institute for Supply Management’s manufacturing index report followed other data that points to contracting factory activity in the U.K., Germany, Japan and South Korea, sparking concern about a manufacturing slowdown. While Tuesday’s reading sent stocks lower, they bounced back as worries eased slightly about growing unrest in Hong Kong and messy politics in the U.K. over Brexit.
The bounceback lifted major stock indexes around the world toward big gains for the week. The Stoxx Europe 600 edged up 0.2% in recent trading, putting its weekly gains at roughly 1.8%. In Asia, the Shanghai Composite rose 0.5%, ending the week up 3.9%, while Hong Kong’s Hang Seng gained 0.7%, closing out the week up 3.8%.
In commodities markets, U.S. crude slipped 0.3% to $56.13 a barrel. Analysts have flagged concerns the price of oil could drop if the global economy slows, despite rising tensions between Iran and the U.S.
Regards,
Ted
Bloomberg Evening Briefing:
https://www.bloomberg.com/news/articles/2019-09-06/your-evening-briefing-how-vaping-may-be-starting-to-kill-peopleMarketWatch:
https://www.marketwatch.com/story/dow-poised-to-notch-3rd-straight-gain-as-fridays-crucial-jobs-report-looms-2019-09-06/printWSJ:
https://www.wsj.com/articles/global-stocks-waver-ahead-of-jobs-report-11567757633Bloomberg:
https://www.bloomberg.com/news/articles/2019-09-05/asia-stocks-seen-higher-bonds-slide-on-u-s-data-markets-wrap?srnd=premiumIBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-leads-stock-indexes-retake-key-support-level/CNBC:
https://www.cnbc.com/2019/09/06/stock-market-us-stock-market-focus-on-nonfarm-payrolls.htmlReuters:
https://www.reuters.com/article/us-usa-stocks/wall-street-flat-after-jobs-data-china-stimulus-plan-idUSKCN1VR1FLU.K:
https://uk.reuters.com/article/uk-britain-stocks/ftse-100-inches-lower-as-miners-oil-majors-drag-idUKKCN1VR0TCEurope:
https://www.reuters.com/article/us-europe-stocks/european-stocks-rise-on-china-stimulus-despite-weak-u-s-german-data-idUSKCN1VR0RMAsia:
https://www.cnbc.com/2019/09/06/asia-markets-september-6-nonfarm-payrolls-us-china-trade-currencies.htmlBonds:
https://www.cnbc.com/2019/09/06/treasury-yields-tick-higher-ahead-of-us-jobs-data.htmlCurrencies:
https://www.cnbc.com/2019/09/06/forex-markets-us-economic-data-in-focus.htmlOil:
https://www.cnbc.com/2019/09/06/oil-prices-edge-higher-set-for-weekly-gain-amid-us-china-trade-optimism.htmlGold:
https://www.cnbc.com/2019/09/06/gold-markets-us-china-trade-talks-us-economic-data-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/futures.ashx 
