Non-Farm Payrolls Data, Fed Speakers, Chain Store Data Ahead

Get your pencils and scorecards ready. Baseball’s playoffs begin this coming week, accompanied by a fresh batch of jobs data and more Fed speakers.

Will the September jobs data due Friday soar out of the park like the reports from earlier in the summer or roll slowly to the infield like the August report? The outcome could help shape market perception in the coming weeks even as earnings start to arrive fast and furious. The Fed says it watches jobs data closely, and chances of a December rate hike have already grown to above 50%, according to futures prices. A blowout jobs number, if it comes, might signal strength in the economy, but could also raise concerns about a possible end-of-year rate hike putting a damper on stocks.

If the jobs number is mediocre like the August one, which at 151,000 new positions was below Wall Street analysts’ expectations and well under the numbers from June and July, it might reinforce impressions that the economy is struggling. A bunch of recent data, including retail sales, Gross Domestic Product (GDP), pending home sales, and some manufacturing numbers all seem to point toward sluggish growth. A poor jobs number on top of all that would likely be interpreted as another sign of softness.

And job numbers aren’t the only metric to watch in the non-farm payrolls data. Hourly earnings, which rose just 0.1% in August, could give insight into inflation, which appeared muted in the monthly personal consumption expenditures (PCE) data released Friday. That number was up 0.2%, in line with Wall Street analysts’ expectations. 

Though the employment report is by far the most important event of the coming week, there’s other stuff going on as well. Monthly chain store sales data on Thursday is a good number to look at, as it could give investors a little preview of where the consumer is ahead of holiday season. It does seem a little early to start talking about holiday shopping here in early October, but some stores have already begun decorating. Earnings from both Costco Wholesale Corporation COST and Nike Inc NKE last week showed signs of struggle, so the chain store sales number may gain more significance as investors try to figure out what’s going on with consumers. The NKE and COST results represent a bit of a conundrum, in light of a consumer confidence report that showed confidence at multi-year highs.

Another thing to watch in the coming week is Fed speakers, with seven Fed speeches on tap. Every time a Fed official speaks, there’s potential to move the market, so that may keep things interesting.

After plunging Thursday on concerns about Deutsche Bank AG DB, the markets seemed to recover some of their mojo, perhaps because investors interpreted the situation as not overly dire. It appears that DB has a very deep balance sheet, though it may face some complexities from a political point of view. As for news impact, these situations never play out in a day or two. First they’re in the news a lot, then a couple times a week and then they tend to fade away. Investors should keep DB on their radar because the situation could have major implications for U.S. banks, but the overall situation seems stable.

What may be less stable is trading in October, which historical data shows to be the most volatile month on the calendar. However, October also often features positive returns. So fasten those seatbelts, especially with the election coming up soon.

From a technical perspective, support for the S&P 500 (SPX) remains in the 2150 to 2152 area, with resistance at 2177 and above that at 2200.

Time to Check the Portfolio: The end of a quarter is often a good time for investors to look at their portfolios and make sure they’re positioned correctly for the months ahead. This quarter it could be especially important to take that step, considering the election cycle volatility that may be coming. Too many people spend more time planning their vacations than looking into their portfolio, and that’s not good. Put a quarterly portfolio check on the calendar like changing batteries in the smoke detector.

No Time-Out for Fed Speakers: Fed officials stayed in the news late last week, with several making comments about rate policy, MarketWatch reported. Philadelphia Fed President Patrick Harper said he backs a December rate increase if the economy continues to grow as expected, while Atlanta Fed President Dennis Lockhart said he expects the Fed to be in a position to raise rates soon. Fed Gov. Jerome Powell, on the other hand, said the Fed could afford to be patient in gradually raising rates as the economy slowly improves. By midday Friday, the probability of a December rate hike was near 56%, according to CME Group futures. There’s little expectation of a November rate hike, as that meeting takes place right before the election.

Costco Earnings Fail to Excite: There’s been some concern in the market about how retailers might do in the coming earnings season, so many investors watched Costco earnings closely to see what they might say about the state of the consumer and for clues about what the rest of the retail sector might report in the coming weeks. Though earnings beat expectations, revenue came in below Wall Street analysts’ estimates, and it’s hard to get excited about the results when revenue doesn’t do well. So the overall takeaway was kind of a flat quarter that didn’t tell the market much about the state of the consumer.

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