The US stock market could be exposed to some volatility as traders could strongly react to new US job market economic data releases. The index rebounded to a certain extent yesterday as bond yields retreated.
Yesterday’s ADP report’s figures were lower than expected, providing some relief after concerns that the Federal Reserve could continue tightening its monetary policy weighed on the market. At the same time, PMI data remained near forecasts, indicating stable economic activity growth.
The market could record additional volatility as traders react to the initial jobless claims data release and to tomorrow’s Non-Farm Payrolls (NFP) report which could strongly affect monetary policy expectations. The labor market remains resilient and is closely monitored by the Federal Reserve.
Weaker-than-expected job market data could support the stock market’s performance and a retreat in yields as traders could price in a softer stance from the Federal Reserve.
The energy sector could continue to see significant losses following the fall in oil prices despite Saudi Arabia and Russia maintaining their production cuts until the end of the year.
Crude markets have tanked due to the mounting concerns about weakening demand in various countries.
Overall, the outlook for the US stock market could remain bearish while the Federal Reserve could still maintain its interest rates elevated for a couple of months with a start in interest rate cuts only expected during the second half of next year.