Is August’s Jobs Report Good for Stocks?

With the economy facing headwinds, the Federal Reserve being on an aggressive interest rate tightening spree, and with inflation still not fully under control, the default medium term movement of equities should be steady to lower – all else being equal.

Today’s Non-farm payroll numbers for August reported by the BLS came in as expected, slightly above 300,000 jobs created which is not too hot to trigger more aggressive interest rate hikes later this month and is not too weak to trigger concerns about a fast-slowing economy impacting consumption and corporate earnings. The Unemployment rate ticked up slightly from 3.5% to 3.7% because of an increase in the labor participation rate.

However, by no means does this mean a green light for equities to go higher. Today’s jobs number gives less of a reason for stocks to go down rather than giving good reasons for stocks to go up. The decline in Treasury bond yields across the term structure is probably what is giving investors more relief.

Tagged Federal Reserve, NFP, Stocks