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Today in the Market (10/7/2022)

Good Evening. Friday was the worst day for U.S. equities since the depths of September’s sell-off, as the government’s monthly employment report revealed that labor markets remained tight despite a slowdown in hiring, dashed hopes that the Federal Reserve will reverse its aggressive rate-increasing course.

The S&P 500 fell 2.80%, but the Dow Jones 2.11%. The Nasdaq Composite led the fall with a 3.80% decline.

PARTNERSHIP?

Walt Disney Co’s ESPN (DIS) is nearing a new partnership deal with sports betting company DraftKings Inc. (DKNG), Bloomberg News reported, citing sources with knowledge of the situation.

The possible agreement would enable the sports broadcaster to capitalize on the rising tide of legalized sports betting, according to the article.

How is this forming? The Wall Street Journal reported in August that ESPN was trying to license its name to big sports betting companies for at least $3 billion over several years to capitalize on the expanding online betting sector. On top of that, in March 2019, Disney bought a stake in DraftKings as part of its acquisition of Twenty-First Century Fox’s entertainment holdings.

HOW DID THE JOBS REPORT PLAY OUT?

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As a succession of oversized interest rate hikes infiltrated the U.S. economy in September, job growth slowed for a second consecutive month. However, the slower nonfarm payroll gain is unlikely to stop policymakers from strong monetary action to combat inflation that remains at a decades-high.

Let’s see how the jobs report played out against the estimated numbers:

  • Non-farm payrolls: +263,000 vs. +260,000 expected
  • Unemployment rate: 3.5% vs. 3.7% expected
  • Average hourly earnings, month-over-month: +0.3% vs. +0.3% expected
  • Average hourly earnings, year-over-year: +5.0% vs. +5.0% expected

With this, what will happen next? The improvement in September employment figures is a positive indication for Fed officials attempting to rein in an extremely tight labor market that has pushed up wages and led to skyrocketing prices. However, the figure remained far higher than the norm of 150,000 to 200,000 before the pandemic, allowing the U.S. central bank to proceed with considerable rate hikes.

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