By Chris Matthews and Mark DeCambre, MarketWatch
U.S. economy added 136,000 jobs in Sept, unemployment falls to
3.5%, lowest since 1969
U.S. stock-index futures reversed early-morning losses Friday
and point to modest gains for Wall Street, after the Labor
Department estimated that the American economy added 136,000 jobs
in August, enough to let the unemployment rate to fall to a 50-year
low of 3.5%, but not to dissuade the Federal Reserve from cutting
interest rates further this year.
Investors await a speech from Federal Reserve chair Jerome
Powell later Friday.
How are benchmarks performing?
Futures for the Dow Jones Industrial Average were up 62 points,
or 0.2%, at 26,237, those for the S&P 500 index were up 5.45
points at 2,917.50, a gain of 0.2%, while Nasdaq-100 futures were
advancing 26 points lower to 7,684.25, an increase of 0.3%.
On Thursday, the Dow closed up 122.42 points, or 0.47%, at
26,201.04 while the S&P 500 index rose 23.02 points, or 0.8% to
2,910.63, and the Nasdaq Composite Index rose 87.02 points to
7,872.26, a gain of 1.12%.
For the week, the Dow is on pace for a decline of 2.3% so far,
the S&P 500 is set for a drop of 1.7%, the Nasdaq was set for a
weekly drop of 0.9%, while the Russell 2000 index , which suffered
a bearish "death cross" on Thursday, was on track to shed 2.2%.
What's driving the stock market?
The 136,000 new U.S. jobs created in September were slightly
below the 150,000 forecast by economists surveyed by MarketWatch,
but revisions to July and August job growth showed that the U.S.
economy added 38,000 more jobs in those months than previously
thought. The average job growth of 157,000 during the past three
months is enough to keep the unemployment rate trending down, even
as it illustrates a steady slowing of job growth in the U.S. labor
market.
"This is the classic definition of a 'Goldilocks' report,"
Michael Arone, chief investment strategist at State Street Global
Advisors told MarketWatch. "The rate of job growth is slowing, but
the labor market continues to be a strength of the U.S. economy,
but it gives the Fed plenty of room to cut interest rates further
later this month."
Average hourly earnings for workers ticked down one cent cent to
$28.09, after rising 11 cents in August. Yearly growth in wages
fell to 2.9% from 3.2% in August.
"The one concern is that average hourly earnings ticked down a
bit," Arone said. "Some might take this as a positive as because
wages aren't rising enough to feed into inflation and it will allow
the Fed to cut rates again."
Investors are placing a slightly lower chance that the Fed will
cut rates at its next meeting ending Oct. 30, with the Fed-funds
futures markets placing an 80.7% chance of a cut later this month,
down from about 90% before the report was released. The market is
still placing a more than 91% chance of a cut by the end of 2019,
however.
The jobs data hold particular significance after reports about
American factory activity showed evidence of contraction in
September , with the Institute for Supply Management's
manufacturing report on Tuesday showing the weakest reading in
about a decade
(http://www.marketwatch.com/story/slumping-us-manufacturers-experience-worse-month-since-end-of-great-recession-ism-finds-2019-10-01)
and an ISM non-manufacturing report on Thursday, coming in at 52.6%
(https://www.instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?navItemNumber=12943)
-- the weakest level in about three years.
Federal Reserve Vice Chairman Richard Clarida late Thursday
played down the chances of a near-term recession. He said the risk
remains low "with appropriate monetary policy," speaking at a
question-and-answer session sponsored by the Wall Street
Journal.
Clarida offered no explicit forward guidance about whether the
Fed would cut rates again at its meeting on Oct. 29-30.
A parade of other Fed speakers are set, headlined by a 2 p.m.
talk from Fed chair Powell, where he will deliver opening remarks
about employment and price stability at a Fed hosted event.
Before that, Boston Fed President Eric Rosengren spoke at 8:30
a.m. at an event in his home region, Atlanta Fed boss Raphael
Bostic will speak at 10:25 a.m. in New Orleans, Minneapolis Fed
President Neel Kashkari will talk at 12:45 p.m. at an event in his
district. Capping off the Friday appearances are Fed Gov. Lael
Brainard, who will moderate a panel at 2:10 p.m., and Fed
Vice-Chairman for Supervision Randal Quarles, who moderates a panel
at 4 p.m.
How are other markets trading?
Shares of Apple Inc. (AAPL) rose 2.4% in premarket trade after a
report
(http://www.marketwatch.com/story/apple-reportedly-asks-suppliers-to-boost-iphone-11-output-amid-strong-demand-2019-10-04)
in the Nikkei Asian Review that the company has asked suppliers to
ramp up production of its latest iPhone 11 model by 10%, or 8
million units.
Costco Wholesale Corp. (COST) reported fiscal fourth-quarter
earnings after the close Thursday, with earnings and revenue
falling short of Wall Street estimates, though same-store sales
growth of 5.1% matched expectations. Shares were down 0.7% in
premarket action.
How are other markets trading?
The yield on the 10-year U.S. Treasury note rose 1.6 basis point
to 1.548%.
Gold prices edged lower after settling higher on Thursday. Gold
for December delivery fell $7.20 to $1,505.30 an ounce on
Comex.
West Texas Intermediate crude-oil for November delivery rose 79
cents, to $53.23 a barrel on the New York Mercantile Exchange.
In Asia overnight Wednesday, the Hong Kong's Hang Seng was down
1.1% as Hong Kong leader Carrie Lam banned protesters from wearing
masks in a hardening of the government's stance on the territory's
most disruptive crisis since it reverted to Chinese rule in 1997.
The mask ban takes effect Saturday.
Meanwhile, Japan's Nikkei 225 meanwhile, gained 0.3% after a 2%
fall on Thursday. European stocks were mostly higher, with the
Stoxx Europe 600 up 051%.
(END) Dow Jones Newswires
October 04, 2019 09:17 ET (13:17 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.