According to an analysis by Bank of America Global Research, futures contracts on the S&P 500 have become more sensitive to the U.S. jobs report than to inflation data.
In a report released on September 2, analysts at Bank of America said: The non-farm payrolls report has once again become the most important data for the stock market. They mentioned that all eyes this week are on the August non-farm payrolls report, which will be released by the U.S. Bureau of Labor Statistics on Friday.
According to research from Bank of America, S&P 500 futures contracts will now be "the least sensitive in post-pandemic history" to consumer price index (CPI) inflation data, while the non-farm payrolls report has fallen sharply from its 2022 peak, with investors now closely watching for signs of a softening in the labor market.
"The stock market appears to be more excited about the prospect of the Fed cutting interest rates this year than about concerns about a potential recession," Bank of America analysts noted. They said the U.S. market's rebound in August is a reflection of this trend. Because, they wrote, this week's "hot non-farm payrolls data poses a greater risk to the stock market." At the same time, the bank's report noted that the U.S. economy remains solid.
Data on Tuesday showed that although the Institute for Supply Management's (ISM) index tracking U.S. manufacturing rebounded slightly from an eight-month low, factories remained in the doldrums in August.
"Despite the weak survey, our tracking of third quarter GDP growth based on hard data remains at a 2.5% annualized rate," said Thomas Ryan, North American economist at Capital. Economics, in a report on the ISM manufacturing index.
The U.S. Bureau of Economic Analysis lowered its estimate in August that U.S. gross domestic product (GDP) expanded at a revised annualized rate of 3% in the second quarter.
“Growth has certainly slowed relative to last year, but this has been a gradual process,” said analysts at Bank of America. They noted that the latest revision to the second-quarter GDP estimate was supported by strong consumption growth, with consumers continuing to remain active.
The market is still in a state of shock, please invest with caution!!!
