Insights from Job Data, Housing Prices, and Crypto ETF Ruling

Traders look to Friday's release of August employment data

• Stocks surge on weak job data, housing resilience, and favorable crypto ETF ruling.
• Job openings dip, housing prices hold, crypto ETF ruling impacts market sentiment.
• PCE report, Apple event, and Hurricane Idalia's impact shape market trends.

In a reversal of fortunes, the stock market staged an impressive rebound on Tuesday following the release of disappointing job openings data. The S&P 500 surged by 1.5%, accompanied by a strong 1.7% gain in the Nasdaq Composite. This upward trajectory marked the third consecutive day of gains, effectively recouping a substantial portion of the losses experienced in August.

JOLTS report

The Tuesday Job Openings and Labor Turnover Survey (JOLTS) report, a key indicator of job openings, presented a lower-than-anticipated figure. The Labor Department revealed that job openings dipped by 338,000 in July, settling at 8.8 million–the lowest level since March 2021. This dip could be indicative of a cooling job market, which may in turn hint at a further easing of inflation.

The upcoming employment report for August, due to be released on Friday, promises to provide a more comprehensive insight into the job market's state. Predictions forecast the creation of 170,000 new jobs, down from July's 187,000, with an unemployment rate steady at 3.5%.

Meanwhile, fresh data concerning the housing market underscored a noteworthy trend: June's home prices remained unchanged from the previous year. On a month-over-month basis, however, prices recorded a consistent 0.7% increase for the fifth consecutive month. It's important to consider that the S&P CoreLogic Case-Shiller Index, responsible for these metrics, is based on data from two months prior. Later in the day, pending home sales data for July is expected to be released, with forecasts pointing to a 0.6% drop from June.

Housing market resilience

The resilience of the housing market, despite the surge in mortgage rates over the past year, raises intriguing questions. Reports suggest that investment groups purchasing homes for rental income and homeowners enjoying lower mortgage rates in the 3% to 4% range might contribute to this phenomenon. The interplay between these factors could be obscuring a clear understanding of the overall housing market situation.

In the coming days, the imminent release of the latest personal consumption and expenditures (PCE) report holds significance. The Federal Reserve heavily relies on the PCE report to guide its decisions on interest rates. Forecasts indicate a 4.2% increase in the year-over-year index, with a month-over-month projection of 0.2% growth.

Shifting gears to the world of cryptocurrencies, a pivotal legal ruling against the Securities and Exchange Commission (SEC) is making waves. A federal appeals court deemed the SEC's rejection of Grayscale's crypto ETF proposal as "arbitrary and capricious." The court has ordered a reconsideration of Grayscale's application, sparking a nearly 4% surge in bitcoin's value and a 15% climb in Coinbase (COIN) shares.

In the realm of individual stocks, Best Buy (BBY) outperformed expectations with its pre-market earnings report, boosting its stock by 4% during Tuesday's trading. However, the company lowered its full-year guidance due to weakening consumer demand, a recurring theme as the holiday shopping season approaches. Conversely, HP Inc. (HPQ) reported a disappointing 10% drop in revenues and issued a weaker-than-expected full-year forecast, leading to a nearly 10% pre-market decline in its shares.

Nvidia continued its triumphant run, reaching a new all-time high in Tuesday's closing prices. Apple also made headlines by announcing the date for its annual event, set for Sept.12, during which the new iPhone will be unveiled. This release is anticipated to reveal a higher-priced model, and market reception will be closely monitored.

Lastly, Hurricane Idalia made landfall in Florida, wreaking havoc and sending oil prices soaring above $81/barrel. This marks the third hurricane to hit Florida in the past year, impacting homeowners still recovering from last year's Hurricane Ian. The increase in oil prices could reverberate throughout the inflationary landscape, influencing the Fed's future interest rate decisions.

As we navigate these dynamic market scenarios, staying steadfast with your investment plan and long-term objectives remains crucial.

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

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