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“Far and away the best prize that life offers is the chance to work hard at work worth doing.” – Theodore Roosevelt
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Heading into the last unofficial day of summer and the August employment report, US equity futures are trading higher, with the S&P 500 up a modest 0.10% while the Nasdaq is up 0.54%. Treasury yields are little changed, with the 10-year trading at 4.76%. That comes despite an FT story noting that the manager of Norway’s $2 trillion wealth fund proposed to cut holdings of US Treasuries in its portfolio. Crude oil is down less than 1% to just below $91, and after a monster rally yesterday that took its price up to $82K, Bitcoin is modestly lower and trading just above $81K.
Asian stocks closed out a mostly negative week on a positive note, with the Nikkei rallying 1.3% as JGBs rallied. Despite the gains, Japanese stocks still finished the week down more than 2%. Hong Kong’s Hang Seng and the South Korean Kospi both rallied more than 1.5%.
In Europe, it’s been another quiet session, with the STOXX 600 rallying 0.1%, led higher by Germany, where the DAX is up 0.3%. Retail Sales in the Eurozone unexpectedly fell 0.6% in July versus forecasts for an increase of 0.3%
The August employment report is the only release on the calendar this morning, and the consensus forecast is for an increase of 55K jobs, which would be an improvement from July’s 23K decline. Average hourly earnings are expected to increase 0.3% with the average workweek remaining at 34.3 hours. Over the last three months, monthly payroll growth has averaged about 20K, so unless August’s report comes in significantly better than expected, overall momentum in the labor market remains sluggish.
As depressing as Labor Day weekend is for anyone who hates the colder weather, it’s been a good year so far for the S&P 500. Heading into Labor Day weekend, the S&P 500 is up over 12%, making this the sixth time in the last ten years that it is up by double-digit percentages heading into the unofficial end of summer. While 10%+ YTD gains heading into Labor Day aren’t all that uncommon (40% of all years since 1945), the current run of strength with gains in nine of the last ten years, including six with 10%+ advances, is impressive.
The chart below shows the performance of the S&P 500 during Labor Day week since 1945, and the dark blue bars indicate the years from the above chart when the S&P 500 was up at least 10% YTD. While the S&P 500 declines an average of 0.14% during all Labor Day weeks, with gains 51% of the time, in years when it was already up at least 10%, it averaged a gain of 0.35% with positive returns 63% of the time.
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