Weekly equities preview: September jobs report to take center stage

Investing.com — The (DJIA) climbed to a new record on Friday, as traders analyzed fresh data suggesting continued progress in reducing inflation. Wall Street also marked its third consecutive week of gains.

The 30-stock Dow rose 137.89 points, or 0.33%, to close at 42,313.00, hitting both a session and all-time high. Meanwhile, the dipped slightly by 0.13% to 5,738.17, and the fell 0.39% to finish at 18,119.59, with a 2% drop in Nvidia (NASDAQ:) dragging down the tech-focused index.

All three major indexes extended their weekly winning streak, with the S&P 500 and Dow adding around 0.6% for the week, while the Nasdaq gained nearly 1%.

Investors were encouraged by inflation data that could give the Federal Reserve more confidence to continue lowering interest rates.

The personal consumption expenditures (PCE) price index for August, which is the Fed’s preferred inflation gauge, rose by 0.1%, in line with economists’ expectations. On an annual basis, PCE increased by 2.2%, slightly below the projected 2.3%.

The upcoming week is packed with employment data, with the September jobs report on Friday taking center stage.

After sharp drops in job openings over the past two months, JPMorgan economists anticipate the August JOLTS report will show relatively stable vacancies.

For the September jobs report, they predict an increase of 125,000 positions, slightly below August’s gain but still a bit above the three-month average.

“The unemployment rate rounded down to 4.2% in August and we think that may round up to 4.3% in next week’s report,” economists said in a recent note.

Other important data releases due this week include the ISM Manufacturing report on Tuesday, ADP jobs data on Wednesday, and jobless claims on Thursday, among others.

Also, Fed Chair Powell is scheduled to make his first public comments on Monday following the recent substantial rate cut.

Nike’s earnings report also in focus

In addition to a slew of important economic data releases, investors will also be keeping an eye on some more earnings reports in the coming days, especially the one from Nike (NYSE:).

Analysts at Barclays expect the footwear and apparel giant to face “meaningful pressure” in the fiscal Q1 2025 amid “franchise lifecycle management” and China deceleration, however, expectations appear “sufficiently de-risked,” they note.

For the near term, analysts believe Nike’s guidance for fiscal 2025 year “is achievable, with a return to wholesale, potential upside in NA DTC, and a Nike-brand footwear restocking cycle as we enter calendar 2025.”

Other companies that will report earnings this week are Lamb Weston Holdings Inc (NYSE:), Carnival Corp. (NYSE:), and Levi Strauss (NYSE:), among others.

What analysts are saying about US stocks

Bank of America: “There have been lots of tailwinds for equities in recent weeks: the Fed, China, and improving economic surprises. NFP and ISM Manufacturing PMI (both out this week) have been the two weakest major data in the past 2m. Hence, we think slight weakness may be overlooked by investors and only sizable misses reignite recession fears. On the other hand, strong prints can further boost confidence in a soft landing.”

Goldman Sachs: “The aggregate index Return on Equity (ROE) premium relative to the median stock has widened to 390 bp, the largest gap since 1980. Furthermore, the spread between the highest and lowest ROE stocks in the market has expanded considerably versus a decade ago, most likely due to the use of financial leverage. A widening profitability gap may partly help explain why investors are paying a premium for ‘quality’ factors today. But we expect these premiums will diminish as the macro backdrop remains solid.”

Wedbush: “We believe the stage is set for tech stocks to move 10%+ higher into year-end and another 20% in 2025 with this tech bull market just hitting its next phase led by the AI Revolution. In our opinion as the Fed and Powell have kicked off its aggressive rate-cutting cycle, macro soft landing remains the path, and tech spending on AI remains a generational spending cycle just starting to hit the shores of the tech sector.”

Morgan Stanley: “Over the next 3-6 months, equity performance, at both the index and sector/factor level, will be determined more by labor data than anything else. The next round of employment data arrives at the end of this week. I believe we would need an upside surprise to drive a sustainable cyclical rotation in the US.”