Stocks closed lower yesterday ahead of this morning's employment report.

At 8:30 AM ET this morning, we'll get the always important Employment Situation report by the Bureau of Labor Statistics (BLS). The consensus is calling for 132,500 new jobs to have been created in September (125K in the private sector and 7.5K in the public), while the unemployment rate stays steady at 4.2%. That would compare to August's 142K (118K in the private sector and 24K in the public).

Average hourly earnings are expected to be up 0.3% m/m vs. last month's 0.4%, while the y/y change is expected top be up 3.7% vs. last month's 3.8% pace.

If the estimates are correct, both September's job tally and August's would be better than July's much weaker-than-expected 89K (74K in the private sector and 15K in public), especially given July's estimates for 180K (155K private, 25K public). Stocks sold off after that, resulting in a correction. But they bounced back since then with both the Dow and the S&P making new all-time highs shortly thereafter.

Another strong report will help show that July's weak showing was the exception and not the new rule going forward. A weaker report could suggest that the Fed is behind the curve in cutting rates.

In other news, nervousness over tensions in the Middle East were exacerbated after Israel struck Beirut yesterday, following Iran's missile attack earlier in the week. The world is bracing for what kind of response Israel has for Iran. Crude oil shot up 5.15% yesterday.

The port strike, which also weighed on the market, was settled yesterday evening. Dockworkers agreed to return to work after accepting a 62% increase in wages over six years. The strike affected ports on both the East and Gulf Coasts. It's been said that a short strike of just a few days would cause limited economic damage. Fortunately, after 3 days of striking, the matter has been resolved. And the market has one less thing to worry about.

Yesterday's PMI Composite Final report showed the Composite Index at 54.0 vs. last month's 54.6. The Services Index came in at 55.2 vs. last month's 55.7.

The ISM Services Index rose to 54.9 vs. last month's 51.5 and views for the same.

Factory Orders were off -0.2% m/m at 4.9% and estimates for 0.2%.

Weekly Jobless Claims rose 6,000 to 225,000 vs. last month's 219K and the consensus for 225K.

And the Challenger Job-Cut report showed a decline in announced layoffs at 72,821 vs. last month's 75,891.

But again, this morning's jobs report is the one everybody's been waiting for.

Next week marks the unofficial start to earnings season. That's great news since stocks typically go up during earnings season. And I expect this one to be no different. Especially given the upward trend of improvement in earnings and sales estimates. Q3'24 earnings are expected to be up 3.7%, and sales up 5.1%; Q4'24 earnings are expected to be up 10.2%, and sales up 5.8%; Q1'25 is expected to show earnings up 12.8%, and sales up 5.7%; and Q2'25 is expected to show earnings up 14.0%, and sales up 5.5%.

Even though Q4 is off to a rough start, the odds for a strong finish are in the bulls favor. In fact, since 1950, the S&P has increased in the last 3 months of the year by more than 4%. And it's up 80% of the time.

And with the interest rate-cutting cycle having begun (stocks typically perform well when interest rates are lowered), that adds yet another bullish catalyst to the market.

Best,