The U.S. jobs report has reclaimed its position as the key data point driving stock market volatility, edging out inflation concerns, says new research from Bank of America (BofA).
Futures tied to the S&P 500 index are now more sensitive to labor market data than inflation figures, reflecting a shift in investor focus.
In a note dated September 2, BofA analysts highlighted the importance of the upcoming U.S. employment report, which will be released by the Bureau of Labor Statistics this Friday.
“All eyes are on the August payrolls,” they noted, underscoring the report’s renewed significance for the market.
Interestingly, the S&P 500 futures market now reacts more sharply to payroll data than to consumer price index (CPI) readings.
BofA’s research shows that the labor market has become a larger source of volatility post-COVID, a symbolic shift in priorities as inflation eases from its 2022 peak.
This could foreshadow a continued focus on employment trends over inflation in the near term for business leaders and investors alike.
Their chart illustrates how eMini S&P 500 futures have responded to nonfarm payroll and CPI data from August 2019 through recent months, with payrolls consistently driving more immediate market movement.
As inflation cools, all eyes remain fixed on the U.S. labor market for signs of a softening economy.
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