We start this holiday-shortened trading week on the quiet side, but ultimately is should speak pretty loudly by this time Friday. This is the latest Jobs Week, and one that comes only a week before the next Federal Open Market Committee (FOMC) meeting, where interest rates are expected to come down a week from tomorrow.
The question remains: how far will rates come down? We’ve been at 5.25-5.50% since late July of last year, and at last we see inflation metrics curbing suitably for either a 25 basis point (bps) or 50 bps interest rate reduction. Where this winds up will have plenty to do with this week’s jobs figures.
Currently, pre-market futures are in the red: -240 points on the Dow, -35 on the S&P 500 and -160 points on the Nasdaq. The S&P has taken the lead in stock gains over the Nasdaq year to date, now at +17%. All four major indexes — including the small-cap Russell 2000 are nicely in the green for 2024.
Jobs, Jobs Jobs: JOLTS, ADP, Claims and BLS
In a normal five-day Jobs Week, the Job Openings and Labor Turnover Survey (JOLTS) comes out on Tuesday. It will be Wednesday of this week, and expectations are for 8.1 million openings to have been recorded for July. It would make the sixth month in the last seven above 8 million job openings. Thankfully, we’re likely down from the 8.8 million we were seeing in February of this year. The Quits Rate is expected at a low 2.1%, as it was the previous two months.
Automatic Data Processing ADP, the private-sector monthly payroll report, gets bumped back one day to Thursday. Last time around, the 122K in job gains from the private sector was scarcely enough to cover the amount of retiring Baby Boomers per month. Thursday will also bring us Weekly Jobless Claims, which have been very well-behaved of late — though this may also have to do partly with newly laid-off Americans calling it a career.
The Employment Situation report from the Bureau of Labor Statistics (BLS) will be released Friday morning, as per normal. Expectations are for a slight rise overall to 162K from the disappointing 114K reported last month. The Unemployment Rate is expected to tick down 10 bps to 4.2%, and Wage Growth year over year is being projected to tick up 20 bps to 3.8%.
Should these numbers come in worse than expected, it could be signs of trouble for the economy. Thus, a 50 bps rate cut would be more likely in that scenario. Should these figures come more in-line with expectations, that would more likely portend a 25 bps cut next week.
Econ Reports After the Opening Bell: Manufacturing and Construction
We’ll get the final print on S&P Manufacturing PMI and ISM Manufacturing, both for August, later this morning. Both are below the 50-level which depicts growth versus contraction. We’ll also see a Construction Spending report for July, which is expected to dip to -0.1% — better than the -0.3% reported for the previous month.
Boeing Cut to Underperform by Wells Fargo
After getting a downgrade this morning from Wells Fargo (WFC), Boeing (BA) shares are trading down nearly -4% in today’s pre-market. Expectations are for an additional roughly -30% drop in share price from here — which comes off a year-to-date performance for Boeing shares -30% already. The company has changed CEOs, but, as thet say, the proof will be in the pudding for the beleaguered aircraft builder.
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