Markets tread water on mixed jobs, inflation data

Poor employment and sticky inflation did not cause equities to budge much this week.MANHATTAN (CN) — Investors were bombarded with a raft of key economic data this week, but they kept their powder dry.The three major U.S. indices diverged this week, with the Dow Jones Industrial Average losing 651 points for the week, the S&P 500 dropping 21 points, and the Nasdaq gaining 122 points.“The stock market seems to be waiting for a new catalyst, neither selling off dramatically or rallying convincingly to new high,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. “We believe a strong earnings season and getting past the midterm elections are what will break the market out of its trading range and see new highs by year end.”On Friday, investors were hit with the latest jobs report, showing only 29,000 jobs gained in September and a rise in unemployment to 4.2%.Wage growth gained only 0.1% last month, well below the 0.3% seen in August and less than expected. Looked at from a year-over-year basis, real wages have fallen now for six months straight, experts say.But Wall Street was not terribly upset with the personal consumption expenditures report, which showed a 0.3% increase in prices, in line with expectations. Core PCE inflation, which excludes food and energy prices, hit 3% year over year, less than the 3.3% consensus expectation.Along with the inflation data, the Bureau of Economic Analysis also noted the personal savings rate among Americans increased to 4.1%, though it is still lower than late 2022.Consumers have taken note of the recent spate of mixed economic data. The monthly consumer confidence index from The Conference Board disappointed, dropping roughly six points to 81.9, much less than the 88 points most analysts had predicted. The “present situation” and “expectations” indices also fell, by 7.9 points and 5.9 points, respectively.Dana Peterson, the board’s chief economist, said the index “deteriorated notably” this month, noting that consumer appraisals of current business conditions turned negative for the first time since September 2024.“Over the next six months, consumers expected both business conditions and the labor market to weaken,” Peterson said in a statement. “Consumers still anticipated their household incomes to rise, but less so compared to previous months.”Gross domestic product for the second quarter also was better than originally expected, revised upward from 1.5% to 2.2%. Previous GDP reports for 2024 and 2025 also were slightly higher than originally reported.Experts say this again shows the impact artificial intelligence has had on the economy. “The annual revisions show AI contributed more to growth and less to inflation in recent years than previously thought,” Michael Pearce, chief U.S. economist at Oxford Economics, wrote in an investor’s note, pointing to the gains concentrated in data centers, research and development investment, and equipment.Pearce wrote the latest revisions “could help shift the conversation from the current focus on AI’s inflationary impacts to include discussion of the disinflationary effects, which could start to show up more prominently in 2027.”Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads