Investors are preparing for a week shaped by U.S. labor data and potential political risks. The release of the September nonfarm payrolls report is expected to dominate headlines, while attention will also turn to the possibility of a federal government shutdown. Economic indicators from the Institute for Supply Management (ISM) and earnings from major companies like Nike (NYSE:NKE) and Carnival Corp. (NYSE:CCL) will provide further guidance.
Nonfarm Payrolls in the Spotlight
The upcoming jobs report on Friday will give a crucial look at the health of the U.S. labor market.
Federal Reserve officials have stressed the importance of monitoring employment trends as part of their monetary policy decisions. Earlier this month, the Fed cut interest rates by 25 basis points, signaling a focus on supporting the slowing labor market over concerns about persistent inflation.
Fed projections indicate that some policymakers anticipate additional rate cuts before the year ends. Lower rates are expected to encourage hiring and investment, though they may also put upward pressure on prices.
Economists predict that September’s payrolls will increase by 51,000, compared with 22,000 in August, with the unemployment rate holding steady at 4.3%. Strong inflation data could influence the pace of future Fed actions.
“A jobs number [less than] 75,000 will probably keep the Fed on track for a […] cut [at its next meeting on October 29], but something [greater than] 115K with the core PCE just below 3% could spur” Fed Chair Jerome Powell and his colleagues to skip a reduction at the gathering, analysts at Vital Knowledge said in a note.
Government Shutdown Concerns
The risk of a U.S. government shutdown could delay the release of payroll data. Lawmakers must pass a stopgap funding bill before the fiscal year ends on Tuesday to prevent a partial shutdown—the 15th since 1981.
Republicans control both chambers of Congress, but Democratic support is required for passage. Democrats have rejected short-term funding bills, insisting that any legislation reverse cuts to healthcare programs.
Congressional leaders are scheduled to meet with President Donald Trump on Monday. Over the weekend, Trump told Reuters he has “the impression” that Democrats may want to reach an agreement.
ISM Data
The ISM’s September reports on manufacturing and services activity are expected to be released regardless of political developments.
Manufacturing PMI is forecast at 49.1, up slightly from August’s 48.7, but still below the 50-point threshold that separates contraction from growth. Services PMI is expected to remain at 52.0, indicating continued expansion in a sector that accounts for more than two-thirds of U.S. GDP. While the employment component of these indices is of interest, historically it has not strongly predicted the nonfarm payrolls outcome.
Nike Earnings
Nike will report quarterly results after the market closes on Tuesday. Investors are closely watching the company’s turnaround under CEO Elliott Hill, who returned last October to address declining sales, eroding market share, and strategic missteps affecting retailer relationships.
First-quarter revenue is expected to decline modestly, as Hill focuses on investments in running shoes and sneakers to boost demand.
CFO Matthew Friend previously noted in March that it would take “several quarters” to clear older inventory, potentially requiring margin-pressuring discounts. Nike also aims to reduce reliance on Chinese production to avoid U.S. tariffs.
JD Sports, a major U.K. retailer of Nike products, said last week that the company is doing “all the right things in terms of resetting” its operations.
Carnival Earnings
Carnival Corp. will kick off its earnings week on Monday, as investors monitor the cruise operator’s recent surge in popularity amid ongoing economic uncertainty.
Rising demand for cruises has driven margins to nearly 20-year highs in Q2. Holland America and Princess Cruises raised their annual profit outlook in June, noting “remarkable resilience amid heightened volatility.” Analysts also highlighted that favorable exchange rates improved the second-half forecast.
Carnival shares, projected to earn $1.32 per share in Q3 according to Bloomberg consensus, have risen more than 22% so far this year.
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