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  • DJIA, added 372.68 points, or 1.42%, to 26,573.72.
  • S&P 500 index put on 41.38 points or 1.42% to 2,952.01.
  • Nasdaq Composite climbed 110.21 points, or 1.4%, to 7,982.47.

The prospects for a Federal Reserve rate cut kept hopes alive on Wall Street following further evidence from US economic data that a rate cut is warranted. The Nonfarm Payrolls report fell behind expectations and Fed chair Jerome Powell said the economy “faces some risks” but is still “in a good place”.

Subsequently, the Dow Jones Industrial Average, DJIA, added 372.68 points, or 1.42%, to 26,573.72 while the S&P 500 index put on 41.38 points or 1.42% to 2,952.01. The Nasdaq Composite climbed 110.21 points, or 1.4%, to 7,982.47.

US data

The jobs report calmed immediate-doom fears but the data certainly left the door open for a rate cut, potentially as soon as this month’s interest rate decision meeting.  

“The September US jobs report shows payrolls growth of 136,000, which was a touch weaker than the 145,000 consensus. It reinforces the message that jobs growth is slowing and with wages also undershooting expectations – growth of 2.9% year-on-year versus expectations of 3.2% – the fundamentals underpinning consumer spending may not be as strong as we had believed,” analysts at ING Bank explained.  

Eyes on the Fed and CPI

Next week should be telling, with not only the US Consumer Price Index print, but Chair Powell will deliver further remarks at the annual NABE Conference next week. The FOMC minutes could also shed some light on the Fed’s thinking about the surges in repo market rates.

“We look for headline CPI to tick up a tenth to 1.8% y/y in September (0.1% m/m) despite another monthly decline in energy prices. Core inflation should stay unchanged at 2.4% y/y, reflecting a firm 0.2% m/m advance “” though slightly softer than in Jun-Aug, as core goods inflation was likely softer m/m. That said, a steady 0.2% m/m gain in services should support core prices,” analysts at TD Securities explained.  

DJIA levels

The DJIA extended its recovery from the 200-day moving average having completed and extended beyond a 50% mean reversion of the August to recent swing highs and to score below the psychological 26000 level. The index rallied to the 50 and 21-DMA confluence area meeting the Sep lows-resistance line in the mid-26000’s following the bullish pin par  marked on the prior session’s daily candlesticks, closing  above the  200 4-hour MA.