Data must continue to deliver if this S&P 500 market rally is to continue By Investing.com

Investing.com — Barclays strategists have grown more bullish on the likelihood of a soft U.S. landing over the past few weeks, largely due to the Federal Reserve’s recent 50 basis point cut in the key rate, signaling their support for growth and stimulus measures unexpected stimulus from China. .

However, with stocks trading at 5,700 and highs, they warn the margin for error is thin, meaning economic data “must continue”.

In this light, the upcoming non-farm payrolls (NFP) report on Friday is seen as crucial, with Barclays economists forecasting a September figure of around 150,000, a slight increase from August.

“The potential resilience of the labor market and the Fed’s willingness to support it mean that US growth remains healthy and forecasts continue to be revised upwards,” they noted.

Meanwhile, Europe’s growth outlook looks weaker despite the European Central Bank (ECB) and Bank of England (BOE) starting their rate-cutting cycles earlier than the Fed.

Economic surprises have recently turned positive in the US, while Europe continues to experience declining activity.

Interestingly, while the US and European bond markets have both become more bullish over the summer, the US market is implying a higher number of future rate cuts compared to Europe.

September’s jobs report is expected to mirror August’s, reflecting a continued slowdown in hiring and modest wage growth.

Like Barclays, consensus estimates expect non-farm payrolls to rise by 150,000, up slightly from 142,000 in August, with the jobless rate holding steady at 4.2%. Wages are expected to rise 0.3% for the month and 3.8% annually, equal to the previous month’s rate.

If the data meets expectations, it would give the Fed the flexibility to continue cutting interest rates without the pressure of falling behind or triggering a recession.