Market Update: Fri, Oct 4, 2019 | LPL Financial Research

Daily Insights

Another volatile day. U.S. stocks posted another volatile trading session Thursday amid unexpectedly soft data and heightened global uncertainty. The S&P 500 Index dropped as much as 1.1% intraday before recovering to finish up 0.8%, its biggest comeback in a trading session since December 27, 2018. S&P 500 futures are up this morning as stocks keep searching for direction.

Technical support for the S&P 500. The S&P 500 is tracking toward its worst week since early August, but there is some good news. Despite the swath of poor global economic data, the S&P 500 remains less than 5% from all-time highs and above its 200-day moving average, which may act as support. We also see potential support near 2,722, a level the index has held multiple times this year.

Services activity surprisingly soft. Trade-related weakness may be bleeding into the U.S. services sector, according to a discouraging Institute for Supply Management (ISM) report released October 3. ISM’s gauge of services activity fell to 52.6 in September, a three-year low and well below consensus estimates of 55. Even though the gauge is still squarely in expansionary territory (above 50), the unexpectedly steep month-over-month drop spooked investors watching for signs of weakness in the U.S. economy. New orders and employment in the services sectors both declined to multi-year lows, and respondents mentioned concerns about tariffs, labor resources, and the economic outlook.

Chugging along. The U.S. labor market keeps chugging along, according to the September jobs report. Nonfarm payrolls rose 136,000 in September, below consensus expectations for a 145,000 gain. However, July and August’s payroll gains were revised up by 45,000, boosting the 12-month average payrolls change to 179,000. Even though hiring still looks sound, wage growth slipped below 3% for the first time since July 2018. We’ll dig into the September jobs report more on the LPL Research blog.

LPL Research on Yahoo! Finance. LPL Financial Senior Market Strategist Ryan Detrick was on Yahoo! Finance yesterday to discuss October volatility, the fourth quarter, the Federal Reserve, and more. Watch the full interview here.

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