Market Update | November 6, 2023

Stocks jumped higher last week, shaking off the prior week’s sell-off. Last week’s uptick is attributed to a retreat in bond yields, which was triggered by easing inflation and a slowing labor market.

The combination last Wednesday of the Fed’s decision to keep rates unchanged, accompanying dovish comments from Fed Chair Powell, and a reassuring Treasury announcement on future bond sales sparked the stock market’s gains. Slight employment gains and weak manufacturing data provided an additional impetus.

Last week’s employment data showed potential for a cooling labor market after many months of confounding economists’ expectations. The first sign was a lower-than-expected growth in new private sector jobs in October, as reported by Automated Data Processing (ADP), which showed a gain of 113,000 new jobs versus a forecast of 130,000, while job openings were little changed.

Initial and continuing jobless claims also rose, exceeding consensus estimates. On Friday, the government’s monthly employment report further confirmed a potentially cooling employment picture, showing an October slowdown in hiring (150,000 new jobs versus September’s revised gain of 297,000) and an uptick in the unemployment rate to 3.9%.

Although a “cooling employment picture” might sound grim, the stock market feels reassured because it means the Federal Reserve’s policies are playing out to keep inflation cool. The market seems to have increased confidence in the interest rate outlook, meaning fewer interest rate surprises by the Fed might be in play.

As always, we will keep informed of these big-picture economic developments. Bringing it closer to home, let us know how we can help you have confidence in your financial planning as we enter the final stretch of the year.

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