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The major stock indexes flipped early losses into an afternoon rally Friday after the U.S. jobs report showed a stronger than expected labor market alongside slowing wage gains. Employers added 336,000 jobs in September, the strongest gain since January and up sharply from the previous month’s upwardly revised 227,000 gain. Prices of stocks and bonds initially fell sharply on the news, but both markets rebounded, as the increase in average hourly earnings was modest and job gains may have been distorted by seasonal adjustments. U.S. Treasury yields dropped from session highs but still ended higher for the week, with the benchmark 10-year note jumping 20 basis points to 4.78% and the 30-year yield climbing 24 basis points to 4.94%, the highest level since September 2007. Friday’s big stock market move secured weekly gains for the major indexes, with the S&P 500 snapping a four-week losing streak to finish 0.5% higher, while the Dow Jones edged up 0.3% and the Nasdaq Composite gained 1.6%. Read Seeking Alpha’s Catalyst Watch for a preview of next week’s major events.
Millions of Americans will start making payments again on their federal student loans, after a pandemic-era pause for over three years ended last Sunday, fanning concerns of the spillover effects on the U.S. economy. Interest began accruing on loans again on September 1 and payments came due starting Sunday. More than 40M people together owe over $1.6T in federal student loan debt. Discretionary spending is widely expected to take a major hit. Investing Group Leader Fear & Greed Trader said monthly payments on all types of consumer debt – including student loans – as a percent of income is very low. In addition, the Biden administration on Wednesday approved debt cancellation for $9B more of student loans, bringing the total approved amount to $127B so far. (64 comments)
The ouster of Kevin McCarthy as U.S. House speaker, a result of escalating infighting within the Republican majority, renewed concerns that a federal government shutdown could happen next month. This marks the first time in history that the House has removed its leader, and underscores the growing governance challenges that threaten the sovereign rating of the U.S. “The near-term concern is that the House’s paralysis will further complicate the already complicated calculus surrounding the forthcoming funding fight,” said BTIG’s Isaac Boltansky. “Over the longer term, ousting the Speaker is wholly consistent with broader structural concerns regarding political dysfunction.” (121 comments)
Walmart (WMT) shoppers seem to be buying less food as the use of drugs for weight loss, like Novo Nordisk’s (NVO) Ozempic, ramps up. Walmart U.S. CEO John Furner said there is “a slight pullback in overall basket” in terms of items bought and the calories in them, although it’s too early to tell how much impact the drugs will have. Walmart is tracking sales patterns using anonymized shopper data to look at the purchasing changes among those taking GLP-1 agonists and those who aren’t. Walmart isn’t alone in tracking the impact of such drugs. Kellanova (K) is also looking at the potential impact on its business and on eating habits. (200 comments)
In the landmark antitrust lawsuit against Amazon (AMZN), the Federal Trade Commission accused the e-commerce giant of secretly developing an algorithm that would examine how much it could raise prices so that competitors would follow. The algorithm – codenamed Project Nessie – helped Amazon boost its profits. And because of Amazon’s dominance, this led competitors to boost their prices as well. Amazon, which stopped using the algorithm in 2019, is being sued by the FTC and 17 U.S. states for allegedly being a monopolist. Despite Amazon’s stock pullback since the lawsuit, SA analyst Tradevestor listed nine reasons why they are adding to their position. (77 comments)
U.S. nonfarm payrolls drove up 336K in Sept., powering past the 160K expected and increasing from the 227K jobs added in Aug. The U.S. Department of Labor revised the August tally from 187K. The unemployment rate stayed unchanged at 3.8%, compared to 3.7% expected. Michael Kramer, of Investing Group Leader Mott Capital Management, called the report “a massive beat,” which will certainly get the Federal Reserve’s attention. Major market averages rallied higher and finished in the green on Friday after faltering early on as Wall Street received the latest round of payrolls figures. U.S. Treasury yields shot higher initially, but tapered back a bit as the day progressed. (269 comments)
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