US stock market prediction: Jobs data, ‘recession risk’ to dictate S&P 500, Dow, Nasdaq. Details here

Wall Street’s benchmark S&P 500 index is up 20 per cent year-to-date near a record high. With the third quarter ending on Monday, the index is on track for its strongest January-September performance since 1997.

U.S. stocks closed another record-setting week with a muted performance Friday, as hope built on Wall Street that the U.S. economy can manage the rare feat of suppressing high inflation without causing a recession. S&P 500 slipped 7.20 points to 5,738.17, but it still closed out a third straight winning week and its sixth in the last seven. The Dow rose 137.89 to 42,313.00, and the Nasdaq composite lost 70.70 to 18,119.59.

US Jobs Data

Hopes for a soft landing in which the Federal Reserve tames inflation without badly hurting growth, have helped drive those gains, along with a 50 basis point rate cut the central bank delivered at its monetary policy meeting this month.

Some worry that the rate cuts may not be enough to avert a downturn, and Wall Street views the monthly employment report as one of the more critical reads on the economy. The prior two monthly reports have shown weaker-than-expected job increases, raising the stakes for the Oct 4 data.Some recent payrolls reports have roiled markets, particularly data showing an unexpected slowdown that helped spark a sharp, days-long selloff in the S&P 500 in early August. The index has since recovered those losses and gone on to make fresh highs.For the September report due out next week, nonfarm payrolls are expected to have increased by 140,000, according to Reuters data on Friday.

The labor data could help solidify views on the Fed’s next move at its November 6-7 meeting. Futures tied to the fed funds rate currently show bets almost evenly split between a 25 basis point cut or another 50-basis-point reduction.

US Economy, Recession

The state of U.S. growth is a focus for investors. A survey of fund managers earlier this month named a U.S. recession as the top “tail risk” for markets, according to BofA Global Research.

Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions, said the recent strength in defensive sectors such as utilities and consumer staples reflect concerns over a looming downturn.

Strong economic data, on the other hand, could provide a boost for economically sensitive groups such as industrials and financials, he said. The S&P 500 industrial sector has gained nearly 11 per cent in the quarter, and the financial sector is up around 10 per cent.

FAQs

Q1. What are key US Stock Market Indexes?
A1. US stock indexes are S&P 500, the Dow, and Nasdaq.

Q2. When is next US Fed meeting?
A2. The next US Fed meeting is on November 6 to November 7.