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Last week concluded on a high note, highlighted by the announcement on Thursday evening that the U.S. dockworkers’ union and the United States Maritime Alliance, which represents ports and shipping companies, reached a tentative agreement to pause their strike until January 15.1 This agreement effectively ended a strike that had disrupted operations at East Coast and Gulf Coast ports earlier in the week, risking the supply of fruits, automobiles and various goods nationwide.2
On Friday, the September jobs report dramatically exceeded economists' projections, showing an impressive increase of 254,000 nonfarm payrolls for the month, up from a revised 159,000 in August, and significantly higher than the Dow Jones consensus estimate of 150,000.3 Additionally, the unemployment rate decreased to 4.1%, down 0.1 percentage points from August.4 This report comes on the heels of the Federal Reserve's (Fed) recent decision to lower interest rates for the first time in over two years, likely alleviating concerns about the necessity for further aggressive rate cuts to bolster the labor market.
U.S. stocks finished last week on an upward trend, propelled by the unexpectedly strong jobs report. All three major benchmarks gained momentum during late afternoon trading, resulting in weekly increases. The Dow Jones Industrial Average climbed 341.2 points (0.8%) to close at a record high of 42,352.8.5 The S&P 500 Index gained 51.1 points (0.9%), finishing at 5,751.1, while the Nasdaq Composite rose by 219.4 points (1.2%), closing at 18,137.9.6 Yields on both 2-year and 10-year government debt experienced their largest weekly increases in nearly two years following September's nonfarm payrolls report,7 reducing expectations for another significant Fed rate cut in November. For the week, the 2-year yield spiked by 36.7 basis points (bps) to 3.93%, marking its most substantial weekly gain since June 10, 2022.8 The 10-year yield increased by 22.9 bps to 3.98%, reflecting its largest weekly rise since October 20, 2023.9
Looking ahead to this week, focus will shift to September’s Consumer Price Index (CPI) report, which is anticipated to decline from 2.5% (over the trailing twelve months) in August to 2.3% in September, with core inflation expected to remain stable at 3.2%.10 Additionally, several Fed officials are scheduled to speak this week, including Alberto Musalem, Raphael Bostic, Susan Collins and John Williams.11 These speeches may offer important insights into the Fed's monetary policy direction and economic outlook moving forward.
Sources:
1,2Associated Press – Dockworkers’ union suspends strike until Jan. 15 to allow time to negotiate new contract; 10/5/24
3,4Yahoo! Finance – US jobs report crushes expectations as economy adds 254,000 jobs, unemployment rate falls to 4.1%; 10/4/24
5,6Charles Schwab – Closing Market Update; 10/4/24
7-9MarketWatch – Treasury yields end with biggest weekly gains of past one or two years after September jobs data; 10/4/24
10,11MarketWatch – U.S. Economic Calendar; as of 10/7/24
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