Day: 7 October 2023

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Dow up 300 points Friday, 6th October 2023 as stocks reverse sharp losses

Nasdaq

Stocks rallied Friday 6th October 2023 even after the release of stronger-than-expected U.S. jobs data and an increase in Treasury yields.

The U.S. economy added 336,000 jobs in September 2023, the Labour Department said. Economists expected 170,000 jobs. 

Confused?

Stocks posted a surprise turnaround on Friday, 6th October 2023 after initially falling on a hotter-than-expected jobs report. At its session low, the Dow had fallen some 270 points, then surged by more than 400 points at in intraday trading. The Nasdaq and the S&P 500 also lost ground too only but then quickly recovered the losses.

Unclear

Traders were unclear as to the reason for the intraday reversal. Some noted it could be the softer wage number in the jobs report that made investors rethink their earlier bearish stance. Others noted the pullback in yields from the day’s highs.

Rally

The rally may just be because the market had been extremely oversold with the S&P 500 at one point in the week down more than 8% from its high earlier this year.

Yields initially surged after the report, with the 10-year Treasury rate trading near its highest level in 16 years. The benchmark rate later eased from those levels, but was still up around 6 basis points at 4.78%.

Extreme market movements maybe here for a while yet.

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U.S. jobs report September 2023

Work

The latest U.S. jobs report for September 2023 was released on Friday, October 6, 2023.

The U.S. economy added 336,000 jobs last month, much more than expected, despite the Federal Reserve’s struggle to cool the world’s largest economy. 

The unemployment rate was 3.8%, in line with August 2023. The data lifted hopes that the central bank will manage to guide the U.S. economy to a ‘soft landing’, where a recession is avoided. Bear in mind the Fed were late in dealing with the initial rise in inflation – so this battle has become harder and prolonged.

The job gains were the largest monthly rise since January 2023, and almost twice what economists had anticipated. Government and healthcare added the most jobs. The labour market still appears solid.

However, not all indicators were positive. The ADP’s national employment report showed that private-sector employers added only 89,000 jobs in September, far fewer than expected. Some factors outside the Fed’s control, such as the autoworker strike and the threat of a government shutdown, could yet damage the U.S. economy. 

The labour force participation rate also remained low at 63.2%, indicating that many workers have yet to return to the labour market since the Covid19 pandemic of 2020.