US Stocks Set For Steep Fall Amid Heightened Anxiety Ahead Jobs Data, VIX Surges: Strategist Flags 2 Reasons Why He Expects More Volatility Ahead

The non-farm payrolls data is keeping traders on the tenterhook and the index futures point to a negative opening on Friday. The caveat here is the the market mood could quickly pivot to positivity if the job gain comes in line with expectations. Following the data, traders get to hear from two Federal Reserve officials, possibly the last ones ahead of the Sept. 17-18 Federal Open Market Committee Meeting, given the blackout period starts on Saturday.

The market direction depends on which worries the traders the most – a slowdown or the rate trajectory. If the job gains grossly disappoint just as its ADP counterpart did, the odds of a 50 basis-point could be in play. But it remains to be seen whether a weak job market would be considered a reason good enough to liquidate risky bets. The CBOE Volatility Index, commonly called the VIX, spiked by over 13%.

On the corporate front, Broadcom Corp.’s AVGO soft guidance is weighing down on the chipmaker’s stock and that of its peers as well.

Futures	Performance (+/-)
Nasdaq 100	-1.12%
S&P 500	-0.63%
Dow	-0.33%
R2K	-0.51%

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY plunged 0.61% to $546.24 and the Invesco QQQ ETF QQQ slumped 1.05% to $456.21, according to Benzinga Pro data.

Cues From Last Session:

U.S. stocks went about in a listless manner on Thursday as traders digested a weak ADP private payrolls number, fairly in-line initial jobless claims data and better-than-expected service sector activity readings. After a negative open, the major indices recovered and rose in the morning session. Lingering worries about Friday’s payroll numbers dragged the market lower yet again and the indices began to move in a lackluster manner before closing mixed.

Gains in some heavy-weighted tech stocks lifted the Nasdaq to a higher close, as it snapped a two-session losing streak, while the S&P 500 Index finished with a modest loss. The 30-stock Dow Jones Industrial Average and the small-cap Russell 2,000 Index settled moderately lower.

Eight of the 11 S&P 500 sectors finished in the red, with industrial, material healthcare and financial stocks seeing marked weakness. On the other hand, consumer discretionary, communication services and IT stocks found some buying interest.

Index	Performance (+/)	Value
Nasdaq Composite	+0.25%	17,127.66
S&P 500 Index	-0.30%	5,503.41
Dow Industrials	-0.54%	40,755.75
Russell 2000	-0.61%	2,132.05

Insights From Analysts:

After August proved to be a wild month for stocks, September has so far lived up to expectations of being a seasonally weak month, and an analyst cautioned that the near term does not hold out much promise. LPL Financial Chief Technical Strategist Adam Turnquist said the S&P 500’s recovery has stalled just under its record highs hit in mid-July.

The index stalled just around its 20- and 50-day simple moving averages. Turnquist noted that there is a price gap at 5,455 and further down, it has support around its August low of 5,119. In the event of a rally August and July highs of 5,648 and 5,667, respectively, will serve as resistances, he added.

Source: TradingView

“Momentum indicators have turned bearish, and signs of defensive leadership have begun to emerge, pointing to more volatility ahead,” Turnquist said, adding that “breakdowns in longer-duration Treasury yields, crude oil, and copper, along with a simultaneous breakout in gold, provide a warning sign of rising risks to an economic soft landing.”

Upcoming Economic Data:

• The August non-farm payrolls report, due to be released by the Bureau of Labor Statistics at 8:30 a.m. EDT, is widely expected to show that 161,000 jobs were added during the month, an increase from 114,000 jobs added in July. The jobless rate is expected to tick down from 4.2% to 4.3%. The average hourly wages, an inflation measure, may have increased by 3.7%, slightly up from the 3.6% growth in July.
• New York Fed President John Williams is due to speak at 8:45 a.m. EDT and Fed Governor Christopher Waller at 11 a.m. EDT.

See Also: How To Trade Futures

Stocks In Focus:

• Broadcom fell about 8% in premarket trading as traders reacted negatively to the chipmaker’s fourth-quarter revenue guidance.
• Other stocks moving on earnings are Smartsheet Inc. SMAR (up about 4%), Smith & Wesson Brands, Inc. SWBI (down over 7%), UiPath Inc. PATH (over 9%) and Zumiez Inc. ZUMZ (up over 4%).
• ABM Industries Incorporated ABM and Genesco Inc. GCO are among the companies reporting quarterly results ahead of the market opening.

Commodities, Bonds And Global Equity Markets:

Crude oil futures moved sideways under the $70 level and gold futures are modestly higher, approaching the $2,550 level, while Bitcoin BTC/USD traded below $56K level and were lower. The 10-year Treasury note yield slid 3.4 points to 3.699%.

Most Asian markets fell sharply ahead of the U.S. jobs data, while Hong Kong did not trade due to Super Typhoon Yagi threat. European stocks also pulled back sharply in early trading.

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