After September’s performance, it’s hard to expect another strong performance from the stock market. The final month of the third quarter was surprisingly good for investors. Typically viewed as the weakest month of the year for stocks, major market averages were on track to close with strong gains through Friday, helped by last week’s sharp interest rate cut by the Federal Reserve. The Dow Jones Industrial Average and S&P 500 both hit new highs this month. The 30-stock Dow closed above 42,000 points for the first time ever, while the broader market index also closed above 5,700 points. But investors are nervous heading into October, the most volatile month for the stock market, with the S&P 500 rising or falling an average of 1.3% daily, according to a CNBC Pro analysis of historical market data going back to 1950. A historically poor month (which typically gets worse in U.S. presidential election years) and contrarian sentiment have many fearing a market pullback or even a correction. Combined with rising geopolitical risks from conflicts in the Middle East and war in Europe, as well as the possibility of further breakdown in the domestic labor market, the outlook for U.S. stocks next month looks tenuous at best. “Can the SPX avoid the typically weak two months of the election cycle calendar?” BTIG chief market technician Jonathan Krinsky asked this week of the S&P 500. “Unlikely .” Regardless, stocks were expected to post one-month and one-quarter profits as of Friday. The Dow Jones Industrial Average and S&P 500 are both expected to gain 1.5% in September, while the Nasdaq is up 2.7%. On a quarterly basis, the blue-chip Dow Jones outperformed the market, rising more than 7%. The S&P 500 rose more than 5%, while the tech-heavy Nasdaq rose more than 1%. Risks of ‘one-sided’ jobs report One of the main catalysts that could push prices higher in October is the September jobs report, released a week later. Investors are focused on the strength of the labor market, especially after the latest major inflation data on Friday signaled again that the Federal Reserve may be victorious in its battle against price pressures. “As simple as it sounds, I think it really depends on the labor market data,” Adam Turnquist, chief technical strategist at LPL Financial, said of the stock market’s short-term direction. The U.S. economy is expected to expand by 15% this month, according to FactSet estimates. million jobs, up from 142,000 jobs in August. Meanwhile, the unemployment rate is expected to hold steady at 4.2%. Turnquist worries that a weak jobs report would cast doubt on expectations for a soft landing — in which growth slows, inflation slows, but the economy avoids recession — which could weigh on stocks. On the other hand, the impact of stronger or in-line stock market reports could be more muted, he said. Seasonal Weakness While stocks broke new records in late September and bulls were firmly in control, skeptics were still waiting for a better time to start pouring more money into the market. They worry that the market is now showing signs of fatigue, given that fewer stocks are hitting new highs or that the semiconductor sector, which has outperformed the market this year, has given up its lead. LPL Financial’s Turnquist expects better buying opportunities could emerge in October if the S&P 500 retests September’s low of 5,400, especially if it falls to the 200-day moving average, which was last around 5,200. For the S&P 500, those levels would imply a decline of about 6% to 9% through Thursday’s close. The broader index itself was last hovering above 5,700 points. Likewise, Jeff Hirsch, editor of Stock Trader’s Almanac, predicts the S&P 500 could fall 5% to 10% in the coming weeks, but said he is optimistic about the end of the year. Hirsch wouldn’t be surprised if the broader index hits a new all-time high after some uncertainty is removed from investors’ minds, with 6,000 being a “reasonable” level. “I hope to be long soon,” he said. One week ahead calendar all times are Eastern Time. Monday, September 30, 2024 9:45 AM Chicago PMI (September) 10:30 AM Dallas Fed Index (September) Profit: Carnival Tuesday, October 1, 2024 9:45 AM S&P PMI Manufacturing Final Value (September) 10am Construction Spending (August) 10am ISM Manufacturing (September) 10am JOLTS Job Openings (August) Earnings: Lamb Weston, Nike, McCormick & Co. 2024-10 Wednesday, October 2, 8:15 AM ADP Employment Survey (September) Earnings: Conagra Brands Thursday, October 3, 2024 8:30 AM Continuing Claims (09/21) 8:30 AM Initial Claims (09/28) 9:45 AM PMI Composite Final Value (September) 9:45 AM S&P PMI Service SA Final Value (September) 10 AM Durable Orders (August) 10 AM Factory Orders (August) 10 a.m. ISM Services PMI (September) Earnings: Constellation Brands Friday, October 4, 2024 8:30 a.m. Preliminary hourly earnings (September) 8:30 a.m. Preliminary average workweek data (September) 8:30 AM Manufacturing Employment Data (September) 8:30 AM Nonfarm Payroll Data (September) 8:30 AM Participation Rate (September) 8:30 AM Private Nonfarm Payroll Data (September) 8:30 AM 30 unemployment rate (September) — CNBC’s Nick Wells contributed reporting
The next jobs report is coming, and Wall Street braces for a volatile October | Real Time Headlines
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