((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
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The main American indices are in the red; the S&P 500 loses more than 1% and the Nasdaq more than 2%
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The technology sector is the weakest in the S&P index; utilities lead gains
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The Euro STOXX 600 index lost ~1.6 %
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Dollar stable; gold down ~2%; bitcoin down ~3%; gross up ~1%
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10-year US Treasury yield rises to ~4.32%
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HALLOWEEN CANDY: PCE, UNEMPLOYMENT CLAIMS, JOB COSTS, ETC
Investors went data hunting on Thursday and filled their plastic pumpkins with numbers that were mostly optimistic and in line with expectations.
First, the Commerce Department's Personal Consumption Expenditure (PCE) report USPCE=ECI took center stage.
As for inflation, PCE prices rose 0.2% in September, higher than August's 0.1% figure, but in line with expectations.
Core PCE prices rose 0.3%, hotter than the prior month's upwardly revised 0.2% increase, but also in line with consensus.
Year-over-year, core and core PCE prices rose 2.1% and 2.7%, respectively, with the former in line with and the latter slightly above analyst estimates.
“What we have here is an economy that's doing pretty well, but inflation remains a bit of a problem,” said Peter Cardillo, chief economist at Spartan Capital Securities. “And the fact that the base rate continues to remain somewhat elevated is a concern, that means the Fed could take a pause,” leaving interest rates unchanged at its next policy meeting.
So the final piece of the September inflation puzzle is falling into place, and it's clear that closing the last gap to the Fed's 2% target is getting easier:
Elsewhere in the report, personal income growth accelerated to 0.3% from 0.2% forecast, while personal consumption rose to a solid 0.5%, stronger than the 0.4% forecast by economists and a solid acceleration from August's upwardly revised 0.3% growth.
Digging a little deeper, spending on goods benefited from a solid rebound to 0.7%, compared to -0.1% the previous month.
Disposable income growth accelerated from 0.2% to 0.3%, but due to faster growth in spending, the closely watched savings rate is seen as a marker of consumer expectations. , fell 20 basis points to 4.6%.
“Real disposable income growth is a little weak, but with inflation expected to decelerate a bit, household purchasing power will be boosted,” says Ryan Sweet, chief U.S. economist at Oxford Economics.
As for the other half of the Fed's dual mandate – the labor market – 216,000 American workers joined the queue at the unemployment office
USJOB=ECI last week, the lowest figure since May.
This is a weekly decline of 5.3%, or 14,000 less than analysts' expectations.
“The overall picture remains that initial demands have remained very weak given the late stage of the business cycle,” writes Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. “Companies still seem to be managing their labor costs by reducing hiring rather than making layoffs.”
Pending USJOBN=ECI applications, which are reported with a one-week lag, decreased 1.4% to 1.862 million, suggesting the possibility that layoff letter recipients had an easier time to find replacement employment, or their benefits have simply expired.
In October, U.S. companies announced they would lay off 55,597 workers, according to executive outplacement firm Challenger, Gray & Christmas.
This is 23.7% less than in September, but a jump of 51% compared to October 2023. Since the start of 2024, planned layoffs are up 4% compared to the January period. -October of the previous year.
This year, like last year, the technology sector was by far the most affected.
Here's how jobless claims compare to Challenger's projected layoffs:
The Labor Department also released the third quarter Employment Cost Index (ECI) USEMPC=ECI, which saw an unexpected slowdown to 0.8%, the index's lowest value since the third quarter. quarter of 2021.
This slowdown is largely attributable to slower wage growth, which ensures that inflation remains on a downward trajectory.
This is also another sign of a slowdown in the job market.
“We believe this data, combined with a welcome deceleration in inflation, supports a steady easing of monetary conditions,” says Carl Weinberg, chief economist at High Frequency Economics.
The slowdown in employment costs coincides with fewer job openings in the JOLTS data, with labor supply and demand moving closer to a better balance:
Finally, Midwest factory activity unexpectedly collapsed in October.
MNI Indicators' Chicago Purchasing Managers' Index (PMI) USCPMI=ECI dipped deeper into contraction territory, losing five points to land at 41.6. Analysts had expected an improvement of 0.4 points to 47.
A PMI index below 50 indicates a monthly contraction; a number below 43 is widely associated with a recession.
After the frenzy surrounding October employment figures, the Institute for Supply Management (ISM) is due to release its national PMI report, which is expected to show a slight improvement to a still-contracting 47.6.
(Stephen Culp)
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FOR THURSDAY LIVE MARKETS:
US STOCKS UNDER PRESSURE IN EARLY TRADE AS YIELDS RISE – CLICK HERE
FUTURE US STOCKS REMAIN IN RED WITH RESULTS, BASIC DATA – CLICK HERE
HIGHER GROWTH, HIGHER INFLATION: ECONOMISTS’ VERDICT ON THE UK BUDGET – CLICK HERE
“FRANC-LY, MY DEAR…” CUSTOMS DUTIES WILL NOT MATTER – CLICK HERE
STOXX AT ITS LOWEST LEVEL IN 7 WEEKS – CLICK HERE
EUROPE BEFORE THE BELL: TECH DRAG AND BANK EARNINGS – CLICK HERE
CLOUDS ARE GREATING OVER “MAG 7” RESULTS – CLICK HERE
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