Stocks Closed Sharply Lower Yesterday Ahead Of Friday's Employment Report

Market Moves You Need to See Stocks Closed Sharply Lower Yesterday Ahead Of Friday's Employment Report [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Closed Sharply Lower Yesterday Ahead Of Friday's Employment Report Stocks closed sharply lower to start the new month. August had a rough start too, but managed to rebound strongly throughout the rest of the month. Could we see the same this month? Concerns over a slowing economy tanked stocks in late July/early August. And a weaker than expected Employment report only added to those worries. But fears of recession were quickly discounted as a parade of economic reports, and earnings, showed the economy was resilient and doing well. It's true that the economy has slowed some. But modestly slowing growth is far different than negative growth (contraction). Another reason why the market quickly bid stocks back up was because the Fed signaled it was finally ready to cut interest rates at their next meeting (and that means September 17-18). Although, with inflation fears receding, but labor risks increasing (per the latest jobs report), there's still some anxiety about whether the Fed may have waited too long. We'll get another look at the labor market on Friday with the August Employment Situation report by the Bureau of Labor Statistics (BLS). This will be the first employment report since the previous one that spooked the market, and since the BLS came out and made a sharp downward revision (largest in 15 years) to the previous 12-month reporting period. At the moment, the consensus is calling for 160,000 new jobs to have been created in the month of August (a sizeable amount above last month's 114K). And it's expected to show the unemployment rate ticking down to 4.2% from last month's 4.3%. While it's unlikely Friday's jobs report (whatever it shows) will preclude the Fed from cutting in 2 weeks, it could help inform what they do afterwards, i.e., will they cut again in November and December? Friday's Employment report will be the main event, but we'll get a number of jobs reports leading up to it, including today's Job Openings and Labor Turnover Survey report (or JOLTS for short); and tomorrow's Weekly Jobless Claims, the Challenger Job-Cut report, and the ADP Employment report (which is often looked at as a foreshadowing to the BLS report, even though the ADP report has a spotty track record of forecasting what the BLS report will say). In other news, yesterday's PMI Manufacturing report came in at 47.9 vs. last month's 49.6 and views for 48.0. The ISM Manufacturing Index was at 47.2 vs. last month's 46.8 and estimates for 47.5. And Construction Spending was off -0.3% m/m vs. last month's upwardly revised 0.0% (from -0.3%), and the consensus for 0.1%. On a y/y basis it was up 6.7% vs. last month's upwardly revised 7.2% (from 6.2%). In addition to the JOLTS report today, we'll also get the International Trade in Goods and Services report, Factory Orders, and the Beige Book report. And even though earnings season is largely behind us, we'll get another 97 companies on deck to report including DICK'S Sporting Goods, Dollar Tree and Hormel Foods before the open, and Casey's General Stores, Copart and Hewlett Packard after the close. And we'll see if the markets can bounce after yesterday's outsized decline. But I would expect volatility this week as we head into Friday's important jobs report. See you tomorrow, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research [Low-Priced Stocks with Sky-High Potential]( Zacks is now revealing its top stock recommendations priced under $10 per share. Each is a high-quality company with prospects for returns of up to 2X and more. 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