How will Today's Nonfarm Payrolls Release Effect Stocks?

Sep 2, 2022

The S&P 500 caught a small rally yesterday, but it could be short-lived. After such a strong selloff, we were due for a relief rally at some point. It appears the markets are still pricing in what the Fed will do this month at their FOMC meeting, but a 50-75 bps is the most likely. We tested the exact level we predicted at 3909. Subsequently, we bounced back to the upper 3900's, where we started running into resistance. In particular, 3978 is proving difficult to crack, but if we are able to, then 4009 will be the next major hurdle and first level in the 4000's. If things turn south, expect support at 3909 again, then the next major level is a low at 3825, but we are likely to find some support in between for the time being.

Headline figures from Nonfarm Payroll data for August suggest some weakness with a headline miss and two month downward revision. This may dampen the Fed's hawkish tone slightly, but we are still likely to see the rate hike we mentioned above. Stocks are likely to continue in a slump until September's FOMC.