Market Recap (10/8/23)
Market Recap of the week of October 2, 2023 - October 6, 2023
Source: Apple Stocks Application
Overall Market Trends:
How markets traded:
Over the course of the week, the stock market faced mixed results. The New York Stock Exchange (NYSE) dropped 128 points (0.83%) and the Dow Jones Industrial Average fell 53 points (0.16%) marking their third consecutive week of losses. On the other hand, the S&P 500 finished the week up 22.50 points (0.52) breaking its four-week losing streak, and the NASDAQ rose 182 points (1.38%) finishing positive back-to-back weeks. It is important to notice that many of said indexes were negative - due to a plunge on Tuesday - until Friday when all drastically rose, pushing many of them back to even or in some cases positive.
What drove these markets:
This week was dictated majorly by the reports released by the United States Bureau of Labor Statistics: the Job Openings and Labor Turnover Survey (JOLTS) report and the U.S. Employment Report.
On Tuesday, the United States Bureau of Labor Statistics published the Job Openings and Labor Turnover Survey (JOLTS) report. The report revealed that job openings were up 690,000 from July to 9.6 million at the end of August. More job openings mean that companies are looking to hire more people which would therefore mean that the economy is still strong. A strong economy could lead to the Fed continuing to raise rates or keep rates higher for longer as their goal is to slow down the economy, not make it stronger. This therefore pushed up treasury yields, adding more competition for the highly volatile stock market.
However, on Friday, the United States Bureau of Labor Statistics released the U.S. employment report showing promise to investors that the economy is going to settle down sooner rather than later. The report far exceeded economists’ expectations, showing that the U.S. economy added 336,000 new jobs over the past month as opposed to the predicted 170,000 new jobs. Additionally, the report mentioned a positive revision to the job gains in July and August. While this would normally be bad for the market as it suggests the hot labor market is not slowing down, investors chose to look at the report from a different angle.
When interest rates rise, companies are generally discouraged from investing since higher interest rates means that the companies have to pay more interest on their loan. These investments include expanding their business which therefore stunts the creation of new jobs. Since a plethora of new jobs are being created despite the high interest rates, it suggests that the economy will face a soft landing as opposed to a recession. While this was impressive, it was not the deciding factor on why the market jumped on Friday.
What investors focused on was the hourly wage rate which increased by 0.2% - the smallest increase since June 2021. This report was consistent with a soft landing for the economy and the Fed’s 2% inflation target. More data in the report pointed towards a cooling job market rather than a hot one which therefore propelled the market on Friday.
Earning Reports from the Past Week:
Looking Towards the Future
Earnings Reports to Look Foward to This Upcoming Week:
