Market Review: October 03, 2024

The economic data for Thursday, October 3, 2024, provided a mixed snapshot of the U.S. economy, focusing on labor market trends, service sector performance, and manufacturing activity. The jobless claims data offered insight into the state of the labor market, while various PMI readings and factory orders highlighted both strengths and challenges within the services and manufacturing sectors. The day's data is crucial for understanding the trajectory of economic growth, inflationary pressures, and potential monetary policy actions.

Today's Event Overview:



• Continuing Jobless Claims: The number of individuals continuing to receive unemployment benefits was 1,826K, nearly unchanged from the previous 1,827K. This stability suggests that the labor market remains steady without significant changes in unemployment trends.
• Initial Jobless Claims: New claims for unemployment benefits rose to 225K, slightly above the forecast of 222K and higher than the previous 219K, indicating a modest increase in new unemployment claims.
• S&P Global Composite PMI (Sep): The composite PMI came in at 54, below the forecast of 54.4 and previous 54.6, reflecting a slowdown in overall business activity, though still indicating expansion.
• S&P Global Services PMI (Sep): The services PMI registered at 55.2, slightly below the forecast of 55.4 and previous 55.7, indicating a slower pace of growth in the service sector.
• Factory Orders (MoM) (Aug): Factory orders declined by 0.20%, missing the forecast of 0.10% and dropping significantly from the previous month’s 4.90% growth, signaling a potential slowdown in manufacturing demand.
• ISM Non-Manufacturing Employment (Sep): The index fell to 48.1, below the forecast of 50 and previous 50.2, indicating a contraction in employment within the service sector.
• ISM Non-Manufacturing PMI (Sep): The PMI rose to 54.9, above the forecast of 51.7 and previous 51.5, suggesting stronger-than-expected growth in the non-manufacturing sector.
• ISM Non-Manufacturing Prices (Sep): Prices increased to 59.4, above the forecast of 56.3 and previous 57.3, indicating higher price pressures in the services sector.
• Fed's Balance Sheet: The Fed’s balance sheet declined slightly to 7,047B from the previous 7,080B, reflecting a minor reduction in the central bank's asset holdings.

Impact Analysis:

• Impact on USD:
• The mixed jobless claims data, with a slight rise in initial claims, may weigh slightly on the USD, suggesting some softness in the labor market. However, stronger-than-expected ISM Non-Manufacturing PMI data indicates resilience in the services sector, which can offset some of the negative impacts. The rise in non-manufacturing prices might also support the USD, as it signals inflationary pressures that could influence monetary policy.

• Impact on Gold:
• Gold may find some support from the weaker factory orders and the rise in jobless claims, as these increase economic uncertainty, potentially driving demand for safe-haven assets. However, the inflationary signals from rising non-manufacturing prices could dampen this impact, as higher yields on bonds might attract investors away from gold. The overall impact on gold is likely mixed.

• Impact on Equity Futures:
• Equity futures might react positively to the stronger ISM Non-Manufacturing PMI, as it indicates solid growth in the services sector, which is a major part of the U.S. economy. However, the weaker factory orders and slowing growth in the services PMI could temper market optimism, particularly in sectors reliant on manufacturing and industrial activity. The modest rise in jobless claims may also raise concerns about consumer spending. Overall, the impact on equity futures is likely mixed to slightly positive, with a focus on service sector strength.

The data for the day presents a nuanced picture of the economy, with the services sector showing resilience while manufacturing faces challenges. The rise in non-manufacturing prices could keep inflation in focus, potentially influencing the Federal Reserve's approach to interest rates. Investors will likely weigh the implications of these mixed signals on future economic growth and monetary policy decisions.