Stocks slip with Fed, earnings, jobs data on deck

U.S. stocks lagged Monday in an early a busy week marked by Fed policy, earnings and employment data.

The S&P 500 (^GSPC) fell 0.6%, while the Dow Jones Industrial Average (^ DJI) erased about 100 points, or 0.3%. The technology-intensive Nasdaq composite (^IXIC) was down 0.8%.

Stock markets are still poised to end the month higher after a brutal september crisis. The Dow Jones Industrial Average was up 14.4% month-to-date as of Friday’s close, making October its 10th best month on record since 1915, according to data from Bespoke Investment Group. If the Dow Jones closes just 2 basis points higher on Monday, this October will beat January 1976 as the best month since the 1930s.

The Federal Reserve’s next policy announcement on Wednesday and the October monthly jobs report due out on Friday will determine whether the tailwind will continue. advancing actions to the end of 2022.

U.S. central bank officials are set to raise the Fed’s benchmark benchmark rate another 0.75%, but some strategists think this might be the last outsized hike before officials scale back their tightening plans.

Pantheon Economics chief economist Ian Shepherdson said that with core CPI still strong and payroll gains averaging 372,000 in the third quarter, investor expectations that policymakers will continue to raise rates next year are justified.

“But we see enough chaff in the wind now to think the economy is at a real inflection point, as investors put too much emphasis on the data, which currently seems to suggest growth is holding up well.” , did he declare.

WASHINGTON, DC – OCTOBER 14: U.S. Federal Reserve Chairman Jerome Powell attends an IMFC (International Monetary and Financial Committee) meeting at the IMF and World Bank Annual Meetings at IMF Headquarters on October 14, 2022 in Washington, DC. (Photo by Drew Angerer/Getty Images)

“We doubt Chairman Powell’s tone will change significantly this week, but he won’t be able to hold back the tide if the numbers turn,” Shepherdson added.

Elsewhere on Monday, President Joe Biden is scheduled to deliver a speech at 4:30 p.m. ET addressing “reports from the final days of major oil companies make record profits even if they refuse to help lower prices at the pumps for the American people,” the White House said in a statement.

The Labor Department’s jobs report is expected to show monthly payrolls fell below 200,000, a sharp drop from an average of 400,000 during much of the pandemic recovery, but still close to the pre-pandemic monthly average. Economists expect 190,000 jobs were added or created last month, according to consensus estimates from Bloomberg.

And on the earnings front, companies continue to report their third-quarter results. Among the S&P 500 companies that have reported so far, the index’s net profit margin is 12%, which is lower than the prior quarter’s net profit margin and lower than the previous year’s net profit, but higher than the five-year net profit margin. average net profit margin of 11.3%.

Bank of America analysts said in a note that overall earnings so far have continued to “defy calls for recession” with many corporate indicators still above expectations.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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