What to Expect This Week: September Jobs Report, Fed Commentary, Sector Data, and Key Earnings

This report provides an in-depth analysis of the anticipated market developments for the week starting September 30, 2024. Key events include the release of the September jobs report, speeches by Federal Reserve officials, and critical economic data from the manufacturing and services sectors. Additionally, significant corporate earnings reports from Carnival Corporation (CCL), Nike (NKE), and Levi Strauss (LEVI) will be closely monitored. This report synthesizes the latest information to offer a comprehensive outlook on market expectations and potential impacts.

Introduction

September Jobs Report

Importance of the Jobs Report

The September jobs report, scheduled for release on Friday, October 4, is one of the most closely watched economic indicators. This report will provide crucial insights into the state of the labor market, particularly in light of recent data suggesting a potential slowdown. According to the latest information, economists expect the addition of 150,000 nonfarm payroll jobs, a steady unemployment rate of 4.2%, and a 3.8% annual increase in hourly wages.

Recent Trends and Expectations

In August 2024, nonfarm payroll employment increased by 142,000 jobs, an improvement from the downwardly revised figure of 89,000 jobs added in July. However, the three-month moving average of job gains has declined to 116,000, the lowest since the labor market recovery began post-pandemic. Despite these improvements, the labor market data suggest ongoing softening, with job openings declining to their lowest level since February 2021 and layoffs rising to their highest level since March 2023.

Potential Market Impact

The September jobs report will be critical in shaping market expectations for future Federal Reserve policy. A weaker-than-expected report could reinforce the need for further monetary easing, while a stronger report might alleviate some concerns about economic slowdown. Given the recent Federal Reserve interest rate cut, this report will be pivotal in determining the trajectory of future rate decisions.

Federal Reserve Commentary

Jerome Powell’s Speech

Federal Reserve Chair Jerome Powell is scheduled to speak at an economic conference on Monday, marking his first public comments since the Fed’s recent interest rate cut. Powell’s speech will be closely scrutinized for any hints about the Fed’s future policy direction. The recent Federal Open Market Committee (FOMC) statement highlighted that economic activity is expanding at a solid pace, although job gains have slowed, and the unemployment rate has increased but remains low.

Other Fed Officials

In addition to Powell, several other Fed officials, including Atlanta Fed President Raphael Bostic and New York Fed President John Williams, will provide insights throughout the week. Their comments will be essential in understanding the Fed’s assessment of the current economic conditions and the potential for further rate cuts. The market is currently anticipating 75 basis points of further Fed rate cuts by year-end.

Market Reactions

The speeches by Fed officials will likely have a significant impact on market sentiment. Investors will be looking for any indications of the Fed’s future policy moves, particularly in light of the recent rate cut and ongoing economic uncertainties. Clear communication from the Fed will be crucial in managing market expectations and preventing undue volatility.

Manufacturing and Services Sector Data

PMI Surveys

The Purchasing Managers’ Index (PMI) surveys for both the manufacturing and services sectors will be released this week. The manufacturing PMIs will be published on Monday, September 30, and the services PMIs on Wednesday, October 2. These surveys are vital indicators of economic activity and will provide insights into the health of these critical sectors.

Recent Trends

The global manufacturing PMI showed a renewed decline in manufacturing output in August 2024, raising concerns about potential spillover effects into the service sector. The headline global PMI remained in expansion territory for the tenth consecutive month, signaling growth, but this growth was heavily skewed towards the service sector as manufacturing output declined. In the U.S., the Manufacturing PMI registered at 47.2% in August, indicating contraction for the fifth consecutive month.

Economic Indicators

Other key economic indicators to watch this week include the Chicago Business Barometer on September 30, S&P Global and ISM manufacturing PMIs on October 1, initial jobless claims for the week ending September 28, and the services PMI on October 3. These indicators will provide a comprehensive picture of economic performance and help gauge the potential for future growth.

Corporate Earnings Reports

Carnival Corporation (CCL)

Carnival Corporation is set to report its earnings for the quarter ended August 2024 on September 30, 2024. Analysts anticipate a year-over-year increase in earnings, projecting earnings of $1.16 per share, representing a 34.9% increase compared to the previous year. Revenue for the quarter is expected to be $7.81 billion, indicating a 14% increase from the same quarter last year.

Nike (NKE)

Nike is scheduled to release its earnings after the market closes on Tuesday, October 1. The company has been facing challenges with sluggish sales, making this report particularly significant for investors. Analysts will be closely watching for any signs of improvement or further deterioration in Nike’s financial performance.

Levi Strauss (LEVI)

Levi Strauss & Co. will report its quarterly financial performance after the market closes on Wednesday, October 2. This report will provide further insights into the apparel industry’s health and consumer spending trends. Investors will be keen to see how Levi Strauss is navigating the current economic environment and any potential impact from celebrity brand endorsements.

Conclusion

The upcoming week promises to be pivotal for market participants, with several key events and data releases set to influence market sentiment. The September jobs report, Federal Reserve commentary, and PMI surveys will provide critical insights into the state of the economy and the potential for future growth. Additionally, corporate earnings reports from Carnival Corporation, Nike, and Levi Strauss will offer valuable information on the health of these companies and their respective industries.

Investors should closely monitor these developments, as they will likely have significant implications for market behavior and future Federal Reserve policy. Clear communication from the Fed and robust economic data will be essential in managing market expectations and preventing undue volatility. Overall, this week will be crucial in shaping the outlook for the final quarter of 2024 and beyond.