Weak Jobs Data, Rate Relief, and the Market’s First Move

Grant Calloway

Twenty nine thousand. That's what the Bureau of Labor Statistics says payrolls grew in September, released at 8:30 this morning, Friday, October second. Trading Economics had the consensus at ninety thousand. So we missed by about two thirds, and, um, stock futures were up going in. Hold onto that, because it sounds backwards, and I promise it isn't.

Grant Calloway

But the headline isn't the juicy part. The juicy part is in the revisions. July, which was reported as plus twenty one thousand jobs, is now minus ten thousand. An outright contraction. August got trimmed too, from a hundred sixty two thousand down to a hundred thirty three thousand. The BLS says July and August combined are sixty thousand lower than first reported. So the, the, the story you thought you had last month? Gone.

Grant Calloway

Now, fairness to the number. The BLS wrote that both nonfarm payroll employment, plus twenty nine thousand, and the unemployment rate, four point two percent, changed little in September. And the agency itself says a monthly swing of about one hundred twenty two thousand is needed to be statistically significant in the payroll survey. So that's partly the survey admitting it has a wide error band. Unemployment did tick up from four point one, but it's sat between four point one and four point three since March.

Grant Calloway

So, the tape. Investing.com reported that at 5:47 Eastern, Dow futures were up two hundred twenty points, S&P 500 futures up thirty four, Nasdaq 100 futures up two hundred thirty eight. That's four tenths, five tenths, seven tenths of a percent. But, and this matters, that was before the print, with investors bracing for it. A Wall Street Journal headline had yields steady ahead of the jobs data, and Trading Economics ran one saying the Treasury sell off eases. I don't have the post release tape in front of me, so I'm not going to pretend I know where it went at 8:31.

Grant Calloway

Wages helped the mood. The BLS has average hourly earnings up five cents, point one percent, to thirty seven eighty one. Three point zero percent over twelve months. Cool. Not hot. Which, uh, brings us to the sigh of relief.

Grant Calloway

Plain English. A stock is a claim on future profits. To price it today, you shrink those future dollars back using an interest rate. Picture a check that arrives in ten years. When rates are high, that check is worth a lot less today. When rates fall, the very same check is worth more. So if weak hiring makes traders think borrowing costs come down, valuations can lift before anybody's lost a single paycheck. Good news for the discount rate, bad news for the worker. Tighter than a drum, that logic. And, and, a little cruel.

Grant Calloway

Now you'll say, a company can't earn money from customers who aren't there. Correct! The discount rate trade is a sprint. The earnings trade is a marathon. The sprint happens in the first few minutes. The marathon takes quarters.

Grant Calloway

And you can see the marathon problem right in the premarket. Nike. Investing.com has it down nine point six percent, to thirty one seventy nine, after mixed fiscal first quarter results. Earnings of forty eight cents beat the forty four cent consensus. Revenue of eleven point two one billion missed eleven point three five, and fell five percent on a currency neutral basis. The Wall Street Journal reports Nike expects revenue for its fiscal year ending in May 2027 to fall by a high single digit percentage. And CEO Elliott Hill wrote in a memo, quote, this work will result in fewer roles across Nike, with decisions starting in 2027. So that earnings beat, uh, you can engineer a beat. The top line, you can't.

Grant Calloway

Now elsewhere, a different kind of morning. Synaptics is up thirteen point eight percent after onsemi and Synaptics amended their merger into an all cash deal, a hundred twenty three dollars a share, about five point seven billion. Moderna is up two point two percent to one ninety three fifteen, because Nasdaq confirmed it joins the Nasdaq 100 effective October ninth, replacing Warner Bros. Discovery. That's index funds forced to buy, not a thesis. And Fair Isaac is down six point nine percent after Bloomberg reported the FHFA plans to require lenders to use credit data from only two of the three major bureaus on mortgages sold to Fannie Mae and Freddie Mac. Deal money, index money, regulatory risk. Not one of those is a consumer story.

Grant Calloway

So, bull against bear, quick as I can. The bull says wage growth at three percent gives the Fed room to ease without reigniting inflation. The bear points at the same report. Temporary help services lost about ten thousand nine hundred jobs in September, per the BLS table. Add a Nike shrinking its payroll, and the bear says consumer fatigue arrives faster than rate cuts can rescue anybody. Both of them have a chart. I, I, I'll tell you where I land. The wreckage is where I go hunting, but I want to know which names are falling on price, and which on, on demand.

Grant Calloway

I've stood on a floor when numbers came in ugly and the first move was the opposite of the textbook, and then it flipped by lunch. That's why I never marry the first move. And, uh, quick plug, Jellypod.com, if you like your markets in short doses.

Grant Calloway

Standard disclaimer. This is education, not investment advice, so do your own homework. 9:30 Eastern, the greatest four hundred milliseconds in capitalism. Let's see which story the tape believes. Talk soon.