Home » Market Daily Watch » Markets Update – TradexSys DailyWatch – 05/10/2023

Markets Update – TradexSys DailyWatch – 05/10/2023

Good morning, Today, Thursday, October 5th, the futures of the American markets are showing a slight downward trend, with the Dow Jones, the S&P, and the Nasdaq in negative territory. However, this situation follows a clearly positive day on Wednesday, which was a rebound after several weeks of pessimism and caution in the markets. Yesterday, the Nasdaq gained 135 points, the Dow Jones 40 points, and the S&P 88 points. This return of optimism was partly fueled by the ADP payroll data, which provides information about new hires in the private sector. The September data showed only 89,000 new hires, well below the analysts’ expectations of 160,000 new hires. This represents a significant decrease compared to the 180,000 new hires in August. This data seems to contradict the job opening data released on Tuesday, which indicated over 900,000 open positions in the labor market, highlighting a significant resilience in the American labor market.

These data could influence the policies of the Federal Reserve because a disappointing performance on the employment front could push the Fed to consider easing the restrictive policies adopted since March 2022. In fact, this data has caused Treasury yields to slightly lower from their 16-year highs, with the 10-year yield dropping from 5.15% to 5.05%. So, there has been a slight pullback in the bond markets. Currently, the relationship between bond yields and the stock market trend is very strong. If Treasury yields do not decrease, it is unlikely that the stock market can stabilize and grow. Therefore, at this moment, investors must closely monitor the American bond market and see if Treasury yields decline, as this could affect the possibility of an end-of-year rally, at least in this quarter.

However, the data to watch will be those released on Friday, which could confirm the ADP data and influence the Fed’s decisions regarding its restrictive monetary policy. If the data confirm the strength and resilience of the labor market, it could be a negative signal for the American stock market. We will remain eager to see how events unfold.


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