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US stocks were mixed on Tuesday following the release of fresh jobs data by the US Bureau of Labour Statistics. Tech stocks reversed earlier losses, leading the mid-morning session with the Nasdaq Composite up about 0.6%.
The benchmark S&P 500 inched more than 0.1% higher, while the Dow Jones Industrial Average fell roughly 0.2%. Doubts are surfacing about the Federal Reserve’s imminent end to rate hikes, sapping enthusiasm. Investors are now looking to upcoming labour market data for evidence the US economy is heading for a soft landing.
The number of job openings in October was 8.73 million on Tuesday, down from 9.35 million in September and 10.47 million in the previous year. This indicates a slowdown in the labour market’s demand. With 5.9 million hires and 5.6 million total separations, the numbers showed minimal fluctuation.
There was minimal variation in the number of quits (3.6 million) and layoffs and discharges (1.6 million) within separations. On Wednesday, ADP’s private payrolls data will be made public, and the Fed will be looking for potential policy shift triggers in this Friday’s critical monthly jobs report.
The US economy is resilient, according to executives from some of the largest banks in the country, but they also cautioned that loan losses will probably continue and advised caution when projecting beyond 2024. The US economy has a much better chance of a soft landing, and the Federal Reserve may be able to return inflation to its target of 2% without inciting a recession. As 2024 draws near, the central bank decided to maintain its “cautious” stance.
Another indication of the slowing demand in the labour market is the fact that job openings in October dropped to their lowest level since March 2021. We don’t anticipate rate reductions until Q3 of next year, but evidence of softer labour market conditions will prevent additional rate increases. The Federal Reserve must be persuaded that inflation is headed back towards 2%, and markets must exercise caution in order to avoid overshooting at this point.
