Strong Jobs Report and Rising Oil Prices Keep Markets on Edge
Strong Jobs Report and Rising Oil Prices Keep Markets on Edge
By:JJ Kinahan
The economy added 254,000 new jobs, but the price of crude oil remains a wild card
- Strong jobs data highlights resilience of the U.S. economy.
- Oil prices are rising because of geopolitical tensions that threaten to reignite inflation.
- Temporary resolution of the dockworkers' strike has reduced concern about immediate economic disruption.
Markets remained relatively quiet yesterday as investors awaited the much-anticipated U.S. employment report. The S&P 500 slipped by 0.2%, the Nasdaq Composite remained flat, and small-cap stocks saw the biggest losses of the day, with the Russell 2000 falling over 0.5%. The Dow Jones Industrial Average also dropped 0.4%.
This morning, the Labor Department released the employment report, which exceeded expectations. Economists had forecast 147,000 new jobs and an unchanged unemployment rate of 4.2%. However, the actual data showed 254,000 new jobs, with the unemployment rate dropping to 4.1%.
Upward revisions for both the July and August jobs reports further highlight the economy’s resilience. With the latest consumer price index (CPI) report scheduled for next week, attention has now turned to inflation trends. Thus far, the data suggests the economy is on track for a soft landing.
The price of crude oil
However, oil prices remain a wild card. Oil commodity surged by over 5% yesterday as geopolitical tensions escalated after Iran's missile attack on Israel. Crude oil prices have risen by nearly 10% this week, which could disrupt the recent progress in curbing inflation.
Oil is a key commodity that could reignite inflationary pressures, especially as it hovers near its 200-day moving average of $75 per barrel. A close above that level could signal bullish trends for oil but could complicate efforts to control inflation.
The dockworkers’ strike
Another major development was the temporary resolution of the East Coast dockworkers' strike. Workers were offered a 62% pay increase over six years, but the deal lasts only until January, leaving the long-term outcome uncertain.
Shares of companies like Walmart (WMT) and Target (TGT), potentially affected by a prolonged strike, have seen slight gains today in premarket trading.
So, the focus remains on jobs data and oil prices, which will likely drive market sentiment. As always, investors would do well to keep their long-term goals in mind.
JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.