S&P 500 (SPY) Report – 10/06/23

Good morning traders!

The S&P 500 ($SPY) is trading below yesterday’s close. Let’s get into it… 

The stock market exhibited a notable uptick on Friday, bouncing back from preceding losses, fueled by a robust US jobs report that surpassed forecasts. This encouraging employment data has fortified expectations that the Federal Reserve (Fed) is likely to implement another hike in interest rates. The positive sentiment swept across the market as investors reacted to the potential of a stronger economy which could withstand further tightening of monetary policy.

The employment figures for September were a highlight, revealing a resilient labor market with the addition of 336,000 jobs, almost doubling the anticipated number. This substantial growth not only underscores the labor market’s strength but also furnishes the Fed with more substantial evidence to prolong a restrictive monetary stance. This employment data, being the last significant payroll report before the Fed’s ensuing policy meeting, holds substantial weight in dictating the trajectory of interest rate policies.

Furthermore, Fed officials, alongside market participants, are closely monitoring the bond markets. Particularly, Fed official Mary Daly hinted on Thursday that the existing levels of long-term bond yields could obviate the necessity for another interest rate hike. This commentary came just as the 10-year US Treasury yields rallied past 4.8% post the jobs data disclosure on Friday. The unfolding dynamics between the job market, stock market, and bond yields are poised to significantly influence the Fed’s upcoming policy deliberations, thus keeping the financial markets keenly anticipative.

Friday Economic Events:
Employment Report 8:30am ET – High Volatility Expected
Baker Hughes Rig Count 1:00pm ET
Consumer Credit 3:00pm ET

Fed Speaker Scheduled:
Christopher Waller 12:00pm ET

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