US Equities Stagnant as Job Growth Slows Unexpectedly
US equities ended the week on a subdued note as investors digested mixed economic signals. The labor market showed signs of cooling, with September nonfarm payrolls adding just 29,000 jobs, far below expectations of 90,000. This data suggested easing pressure on the Federal Reserve to tighten monetary policy further, even as Treasury yields remained elevated and oil prices fluctuated.
Inflation data provided some relief, with the Fed’s preferred measure rising 3.0% year-on-year in August, slightly below forecasts. Meanwhile, Eurozone inflation exceeded expectations, driven by higher energy costs. In the UK, manufacturing activity continued to expand, while the Reserve Bank of Australia raised interest rates by 25 basis points, hinting at further tightening.
Political developments also made headlines, with right-wing candidate Flavio Bolsonaro leading Brazil’s presidential election after the first round. Investors now await key economic indicators, including S&P Global PMIs and ISM Services PMI in the US, as well as PMI updates in the Eurozone and UK.
Consumer sentiment remains unusually weak, with Americans reporting lower confidence than during the Global Financial Crisis and Covid-19 pandemic. This contrasts with strong equity markets and robust economic growth, highlighting a disconnect between consumer perceptions and business surveys. Rising living costs and housing affordability issues are likely contributing to financial stress among households, despite overall economic resilience.