Week Ahead Market Commentary – September 9, 2024
Weak Payrolls Set A Bearish Tone For Stocks and Bullish Tone For Short Rates
Last week both the ADP and JOLTS reports showed a weaker employment picture, setting up concerns for the August employment report on Friday.
Well, the August employment payrolls data was weaker than expected – across the board. Adding to market concerns were the sharp downward revisions to the July employment data – which reinforces the slowdown in the labor market. This all but assures the Federal Reserve (Fed) will be cutting interest rates this month (we’re still thinking 25 basis points). This also had the 2-year Treasury yield breaking down – an action that points to short interest rates continuing their decline.
On the other hand, stocks saw the data as being bearish, so equities were down sharply last week. September is known for its volatility and the first half of the month is seeing a test of the lows set in early August. The pullback and test appear to be three quarters of the way completed. Also, the breadth and volume of the market is strong, suggesting the Bull is still intact and we’re just seeing a seasonal correction. We continue to believe equities can rally into the end of the year.
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