The Fed just delivered its first cut of the year, and officials have penciled in more through the end of next year to give the job market a boost. If data on jobs come in too strong, it could make the Fed less willing to cut rates. If the numbers are too weak, meanwhile, they could mean a recession is coming.
Either extreme would hurt the stock market, which has run to records from a low in April in large part on expectations that the Fed will cut rates several times. The stock market is already facing heavy criticism for being too expensive after prices ran so high.
Another potential wild card is hanging over the market, meanwhile. The US government seems to be heading toward a shutdown at the end of the day following another political impasse in Washington.
The economy and stock market have made it through past shutdowns without much wear, and many economists and professional investors feel relatively OK about another one. The S&P 500 has climbed an average of 4.4 per cent during past shutdowns and is positive over the last five, according to Monica Guerra, head of US policy at Morgan Stanley Wealth Management.
The timing of this potential shutdown, though, would likely cause delays for several important economic reports. That includes a release due on Friday about how many jobs US employers created and destroyed in September.
That could make Wall Street twitchier when investors are already nervous about the state of the economy and what that means for the potential for cuts to rates. The Department of Labor has already said that the Bureau of Labor Statistics will completely cease operations if there’s a lapse.
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On Wall Street, Spotify Technology sank 6.4 per cent after the Stockholm-based streaming giant said its founder, Daniel Ek, is stepping down as CEO to become the executive chairman. Two of his lieutenants will replace him as co-CEOs: Chief Product and Technology Officer Gustav Söderström and Chief Business Officer Alex Norström.
Lamb Weston jumped 4.1 per cent after the supplier of frozen French fries and other potato products reported a stronger profit for the latest quarter than analysts expected.
In stock markets abroad, indexes ticked higher in Europe following a mixed finish in Asia.
