Jobs and Oil Prices Are Keeping Markets on Edge

DealBook|Jobs and Oil Prices Are Keeping Markets on Edge

Why the jobs report is so pivotal

With just over a month to go until Election Day, Friday’s jobs report, set to be published at 8:30 a.m. Eastern, has outsize importance. Investors will look for clues to what the Fed might do next with interest rates, as well as how the economy is doing.

But that isn’t the only number on investors’ minds. Further rises in oil prices, especially given an ambiguous statement by President Biden on whether Israel would attack Iran’s oil fields, could have just as huge economic consequences.

What economists expect from Friday’s report: Companies probably added 150,000 jobs in September, up from 142,000 in August, and the jobless rate stayed at 4.2 percent, according to a Bloomberg survey of economists.

Such a reading would boost hopes that cooler inflation, stable growth and low unemployment are here to stay. That rosy economic picture was bolstered on Thursday with figures showing that services activity last month expanded at their fastest pace since February 2023.

That will probably inform the Fed’s thinking about rates, after it cut borrowing costs by a half percentage point last month for its first reduction in four years. Jay Powell, the Fed chair, suggested this week that the central bank was leaning toward quarter-percentage-point cuts in the coming months: “This is not a committee that feels like it is in a hurry to cut rates quickly,” he said at a conference.

Policymakers are still watching the labor market closely, however. The Fed is trying to slow growth just enough to guide inflation to its 2 percent target without overchilling the economy and disrupting the job market. Policymakers’ big worry is that a sharp slowdown could tip the U.S. into recession.