'Position For A Recovery In The Stock Market': 8 Experts React To October Jobs Report, What It Means For The Fed

The SPDR S&P 500 ETF Trust SPY traded higher Friday after the Labor Department reported strong U.S. jobs market numbers from October.

The U.S. added 261,000 jobs in October, beating average economist estimates of 205,000 jobs. The unemployment rate increased 0.2% to 3.7%, above consensus estimates of 3.5%. Wages were up 4.7% year-over-year and increased 0.4% from September.

Too Soon For Fed Pivot? Bryce Doty Sr., VP/senior portfolio manager at Sit Fixed Income Advisors, said another hot jobs number is bad for markets, and the Fed is misguided in thinking job destruction will bring down inflation.

"However, the Fed has succeeded in hurting wage growth with the 3 month wage growth having declined to an annualized rate of just 3.9%," Doty said.

Jan Szilagyi, CEO of Toggle AI, said the Fed will interpret Friday's jobs data as an indication it's too soon to talk about a pause in its tightening.

"There is plenty of evidence that things are slowing down and job weakness is coming, but it’s for now focused on the tech sector - Twitter, Lyft, Stripe etc. all announcing sizable layoffs," Szilagyi said.

Peter Essele, head of portfolio management at Commonwealth Financial Network, said the labor market remains strong despite fears of an imminent recession.

"If labor growth remains strong and earnings growth slows, it’ll be a win-win for investors since there will be less pressure on the Fed to raise rates," Essele said.

'Moving In The Right Direction': Quincy Krosby, chief global strategist at LPL Financial, said the uptick in unemployment is likely good news for the stock market.

"This report should keep the Fed focused on 50 basis points for the December 14 decision," Krosby said.

Charlie Ripley, senior investment strategist at Allianz Investment Management, said Fed Chair Jerome Powell is likely not pleased with another jobs report that was stronger than expected.

"The bottom line is that despite the employment data not showing a swift slowdown, the data appears to be moving in the right direction, but at a very slow pace," Ripley said.

Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said it will be difficult for the Fed to bring down inflation if the job market and consumer spending remain strong.

"We think it is prudent to position for a recovery in the stock market – because so much bad news is already priced in – but to realize that the new market leaders are likely to be in energy, materials and industrials over the next market cycle and it isn’t likely to be led by the darlings of the previous market cycle (e.g. technology, communication services and other long-duration equities)," Zaccarelli said.

Seasonal Noise: Jeffrey Roach, chief economist for LPL Financial, said the Fed will likely continue full steam ahead in tightening its policies.

"The sizable number of individuals who have not yet re-entered the workforce is complicating the Fed’s desire for a more balanced labor market," Roach said.

Luke Lloyd, wealth advisor and investment strategist at Strategic Wealth Partners, said the holiday season may be contributing to stronger-than-expected employment numbers.

"All-in-all, the surface level numbers show that the Fed will continue down the path of higher rates and won't be changing that position anytime soon," Lloyd said.

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