A jobs report due October 2 and a closely watched inflation gauge will shape expectations for the Federal Reserve's next rate move, after the central bank's first hike in three years. The S&P 500 sits near record levels, but cracks beneath the surface show the rally has grown narrower.
Investors will pore over a fresh employment report and an inflation gauge in the coming week to gauge how far the Federal Reserve will push its rate path, a trajectory that could unsettle a US stock market rally sitting near records.
Payrolls report looms over rate bets
The monthly employment report, due on October 2, will be the main event for Wall Street this week. Economists polled by Reuters expect the September payrolls to show growth of 100,000 jobs and an unemployment rate of 4.2%.
Meanwhile, the Fed raised rates by a quarter percentage point on September 16, its first rate hike in three years, and signaled it would raise again before the year is out. Fed funds futures on Thursday suggested a greater than 60% chance the central bank hikes at its October meeting, according to LSEG data.
According to Reuters, Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest Wealth Management, said: "The averages have held up well, but the average stock has not."
Inflation gauge and a narrowing rally
Wednesday's release of the personal consumption expenditures price index, closely followed by the Fed, will offer insight into inflation trends. In the prior report, the core PCE index increased 3.3% in the 12 months through July, well above the central bank's 2% target.
The S&P 500 was less than 1% below its mid-August peak on Friday and remained up about 13% in 2026. Yet eight of 11 S&P 500 sectors were in negative territory for the month, with financials and utilities among those down about 5%, and an equal-weight version of the index down about 4% in September.
At the same time, the 30-year Treasury yield reached its highest level in over 20 years, and the 10-year yield rose well above the 5% threshold this week, adding competition for stocks. Rate hikes raise borrowing costs and slow the economy while pushing bond yields higher.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
