Oppenheimer chief investment strategist John Stoltzfus says U.S. economic data continue to point to resilience rather than recession, even as stronger-than-expected payrolls have pushed up expectations for a Federal Reserve rate hike this month. The U.S. economy added 162K jobs in August, nearly three times the 55K median forecast in a Bloomberg survey, while payroll gains for the previous two months were revised higher by 55K. The unemployment rate held at 4.1% as labor force participation increased. The data have lifted the market-implied odds of a 25-basis-point Fed hike at the Sept. 16 meeting to about 60%, from less than 50% before Friday's report. The Institute for Supply Management's surveys also pointed to continued expansion, with the manufacturing index falling one point to 54.6 and the services index rising 1.3 points to 55.4. Stoltzfus said the latest figures support the view that weakness seen in previous months may have been a 'soft patch,' with recession concerns appearing overdone. The S&P 500 remains close to record territory, 1% below its Aug. 13 record close of 7,798.99 and up 12.8% year to date. Second-quarter earnings have remained strong, with reported profits up 53.2% on 15.6% revenue growth. Stoltzfus also noted that current AI enthusiasm does not resemble the late-1990s technology bubble, as today's technology is already deeply embedded in businesses and consumer life. Key risks remain inflation and geopolitical tensions, particularly the U.S.-Iran conflict, with oil rising 9.7% last week to $91.48 a barrel.
HSBC Holdings PLCStrong payrolls raise odds of Fed rate hike, pushing policy rate up.
Rate hike expectations lift Treasury yields.
