Stocks closed higher Friday after the latest jobs report came in much stronger than anyone was expecting. Investors also looked ahead to next week's busy lineup, which includes a key inflation update and the start of third-quarter earnings season.
Ahead of the open, data from the Bureau of Labor Statistics showed the U.S. added 254,000 new jobs in September – easily outpacing economists' estimate for the addition of 150,000 positions. Meanwhile, the unemployment rate fell to 4.1% from 4.2%.
The September job report "should put to rest – at least for the next month – the idea that the economy is about to fall off a cliff or that imminent doom is on the horizon," says Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
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While Zaccarelli doesn't want to get too optimistic based on one report, "what we have now is an economy that is expanding, a job market which is solid (if not strong) and a Federal Reserve that has not only stopped raising rates, but is actually cutting them." He adds that this is "an excellent backdrop" for owning stocks.
Meanwhile, according to CME Group's FedWatch Tool, futures traders are now pricing in a 99% chance the Fed will cut rates by a quarter-percentage point at its November meeting – up from 68% one day ago. Odds of half-percentage point rate cut plunged to 0% from 32%.
Rivian sinks on deliveries miss
In single-stock news, Rivian Automotive (RIVN) underperformed Friday, declining 3.2% after the electric vehicle maker's third-quarter deliveries came in below expectations. To make matters worse, the company lowered its full-year production outlook due to a supply shortage.
"We have been skeptical of RIVN's ability to achieve its 2024 guidance from the start and think the announcement is likely to raise red flags among investors," says CFRA Research analyst Garrett Nelson (Sell).
He adds that his list of concerns toward the stock is "lengthy" and includes "slowing EV growth, a lack of visibility related to its reservation count, a troublesome cash burn rate, and the high capital expenditures requirements of building a new factory in Georgia."
Tesla stock gains ahead of robotaxi event
Elsewhere, Tesla (TSLA) stock shot up 3.9% ahead of next week's highly anticipated robotaxi event. The EV maker is expected to unveil its Cybercab prototype and the robotaxi platform at Thursday's "We, Robot" event. TSLA is also likely to release an update for its Full Self-Driving (FSD) technology and reveal a timeline for when the vehicle and service will go live.
But Bernstein analyst Toni Sacconaghi Jr. thinks Tesla is just playing catch-up at this point. "While Tesla is clearly focused on launching a robotaxi, Waymo and Cruise are already operating robotaxis in the U.S. today," the analyst says. "The available data is clearly imperfect, but as of today Tesla appears to be lagging behind the leaders in the space."
Will Spirit Airlines file for bankruptcy?
Spirit Airlines (SAVE) stock plunged 24.6% after a report in The Wall Street Journal suggested the low-cost carrier is in discussions about a possible Chapter 11 bankruptcy filing.
"A potential bankruptcy filing from Spirit Airlines would not be a surprising result given the state of the industry and specific situation at the airline," says Peter McNally, global head of analysts at Third Bridge. "Since the tie-up with JetBlue (JBLU, +14.2%) was terminated earlier this year, the challenges facing Spirit Airlines have only intensified, and a return to a normal operating environment was never in the cards."
As for the main indexes, the Dow Jones Industrial Average added 0.8% to 42,352, the S&P 500 rose 0.9% to 5,751, and the Nasdaq Composite gained 1.2% to 18,137.
Looking ahead, there are plenty of potential fireworks on the immediate horizion. While Thursday morning's release of the September Consumer Price Index (CPI) headlines a busy economic calendar, third-quarter earnings season kicks off with several big banks set to report on Friday.
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