New York –
We will see if investors’ hopes for a soft landing for the U.S. economy come true next week, when the government releases closely watched data on the labor market. This comes after a string of poor jobs reports.
The S&P 500 (.SPX), which is a big deal on Wall Street, is up 20% so far this year and is getting close to a record high. As of Monday, the end of the third quarter, the index is on track to have its best January–September showing since 1997.
These gains were helped by hopes for a “soft landing,” in which the Federal Reserve controls inflation without hurting growth too much. This, along with a 50 basis point rate cut that the central bank made at its monetary policy meeting this month also played a role.
A lot of people are worried that the rate cuts might not be enough to stop an economic downturn. The monthly job report is seen as one of the most important economic reports on Wall Street. The previous two monthly reports showed slower-than-expected job growth, which makes the Oct. 4 figures even more important.
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Wasif Latif, president and chief investment officer at Sarmaya Partners, said, “Stocks are priced for a Goldilocks case or a soft landing.” “The jobs report could potentially either confirm that or derail that.”
Some recent reports on payrolls have shaken up the markets.
In particular, data showing an unexpected slowdown helped start a sharp, days-long selloff in the S&P 500 in early August. Since then, the index has made new highs and made up for those losses.
Based on data released by Reuters on Friday, nonfarm payrolls are projected to have grown by 140,000 by the time the September report comes out next week.
The jobs report could help people decide what the Federal Reserve will do next at its meeting on November 6-7. Bets on futures that are tied to the fed funds rate are almost equally split between a 25-basis-point cut and another 50-basis-point cut.
“The sum of the data will always be important,” economists at Deutsche Bank wrote in a recent note. “However, it will be new labor market data that will need to give the Fed more confidence that the trend of weakening is stabilizing.”
