U.S. stocks started October higher, but expensive oil and high borrowing costs continue to weigh on companies. Today's employment report will help us judge how strong the economy remains or how high wage pressure is as we assess whether this recovery can continue.

Strong employment means an economy in which companies can sell their products and services. The same data can also fuel expectations that interest rates will stay high for longer. Looking only at how many people found jobs will therefore not be enough today; wages, unemployment, and the bond market's response need to be assessed together.

Key takeaways

  • For stocks to sustain their gains, good economic news also needs to avoid pushing costs higher. Employment slowing without a sharp deterioration, alongside easing wage growth, would be a more supportive combination.
  • Financial analyst Tunç Şatıroğlu (@tuncsatiroglu) thinks a possible decline in oil could bring down inflation expectations and Treasury yields. This is a conditional explanation of how the relief he expects might emerge; it is not enough to conclude that yields have peaked.
  • The gold ETF GLD ($GLD) rose to $382.76, while the silver ETF SLV ($SLV) reached $55.02. Both recovered part of Wednesday's losses. A one-day gain does not justify assuming that these assets will provide protection whenever stocks sell off.

What happened?

  • According to CNBC's October 1 market-close coverage, oil rose while the 10-year U.S. Treasury yield climbed during the session before easing. The late decline in the yield offers some relief, but inflation pressure does not disappear while energy remains expensive. A company paying more for fuel and transportation may raise prices if it can pass those costs on to customers; if it cannot, its profits may come under pressure. Oil moves therefore matter beyond energy companies. Even if today's report shows slower wage growth, energy-driven cost increases could continue; the two sources of pressure need to be tracked separately.
  • QQQ ($QQQ), which tracks the Nasdaq 100, finished Thursday at $742.03, compared with the previous close of $739.77. Buying in technology stocks continued, but rising prices and improving financing conditions for companies are different things. Paying more today for future profits depends on growth and on the cost of reaching those earnings.
  • TLT ($TLT), which holds long-term U.S. Treasury bonds, ended the day at $77.71. It rose above its opening price but did not exceed the previous day's close of $77.78. Distinguishing an intraday recovery from a daily gain matters here. Existing bond prices can rise when yields fall; longer maturities are more sensitive to changes in yields, so a move in the opposite direction can also produce larger losses.

What changed since yesterday?

  • The broader market had failed to hold its gains on Wednesday despite the lower inflation reading. On Thursday, technology stocks rose again and buying in chips strengthened. The focus now is whether these gains can hold after the employment report.

Market levels

  • The Nasdaq 100 last closed at 30,501.56, just above the 30,500 intermediate resistance level tracked by Şatıroğlu; such a small margin is not enough to establish a strong breakout. If the index holds here, 30,800 is the next resistance level above it, while 30,000 is the support to watch on a pullback.
  • The semiconductor ETF SMH ($SMH) rose from $609 to $617.81. Although it reached $620.91 during the session, it closed below Şatıroğlu's $618-$620 resistance zone. Reclaiming that area is needed for the advance to continue. Şatıroğlu also identifies $600 as a stop-loss boundary; this does not mean the price will find support there.
  • Bitcoin is around $86,599 this morning. It has moved above the previous $85,100-$85,200 confirmation zone; holding that area is now what matters. A move back down would weaken the breakout. Further below, support at $82,700 remains the boundary to watch in a broader pullback.

Red flags

  • A weak employment report would not necessarily lift stocks even if it brought Treasury yields down. If companies' sales expectations also deteriorate, the benefit of cheaper financing may be limited. The reason for a decline in yields needs to be considered alongside the price move.
  • There can be a lag between news of relief in oil and a sustained decline in energy costs. When assessing company profits, assuming that a daily oil move feeds immediately into every expense can overstate the expected improvement.

Calendar

  • Today, 3:30 p.m. Turkey time: the U.S. September employment report. Nonfarm payroll growth, the unemployment rate, and average hourly earnings need to be read together. Revisions to previous months can also change the meaning of today's headline number.

My analysis

Today, I do not regard the highest employment number or the lowest Treasury yield as a positive outcome on its own. I am looking for an economy strong enough to sustain company revenues alongside easing cost pressure. Strong employment can support sales, while rapidly rising wages can increase expenses. Combining the two under a single headline makes it harder to see how companies will be affected.

After the release, I will first look at why Treasury yields are moving, then at whether stocks can carry their initial response through to the close. Buying in chips that also supports the broader index would strengthen my assessment. If wage pressure persists, oil stays expensive, and growth weakens, however, companies could face a squeeze on both costs and revenues. That would give me more reason to be selective after a one-day rise.

Sources

This is not investment advice; it is a research and monitoring note.