Stocks closed higher on Friday with most of the indexes finishing higher for the week.

The big three indexes chalked up another weekly gain, making it 4 up weeks in a row. The mid-cap S&P 400 was also up for the 4th week in a row as well. The only one missing the cut was the small-cap Russell 2000, which ended lower for the second week in a row.

Friday's Employment Situation report came in much better than expected with 254,000 new jobs being created in September (223,000 in the private sector and 31,000 in the public), vs. the consensus for 132,500 (125,000 private and 7,500 public). The unemployment rate ticked down to 4.1% vs. last month's 4.2% and views for the same. The participation rate was steady at 62.7%. And average hourly earnings were up 0.4% m/m vs. last month's 0.5% and estimates for 0.3%, while the y/y change came in at 4.0% vs. last month's 3.9% and estimates for 3.7%.

I should note that while seasonal adjustments are common (to make up for predictable seasonal patterns/distortions), this September saw the largest upward seasonal adjustment after 2019 and 2020.

Revisions to previous months were up with July adding 55,000 more jobs to 144,000, and August picking up 17,000 to 159,000.

September's biggest job contributors came from the following industries: Food Services and Drinking Places added 69,000 new jobs; Health Care added 45,000 jobs; Government employment was up 31,000 (16K in local government, 13K state, and 2K other); Social Assistance jobs increased by 27,000; and Construction jobs were up 25,000.

The much larger-than-expected job gains helped allay worries over a labor slowdown. But it also probably reduced any likelihood for a 50 basis point cut in November (vs. 25 bps), as some had hoped. Although, we will get one more Employment Situation report on 11/1, before the next FOMC meeting on 11/17-18.

Nonetheless, the markets cheered the report, sending the Dow and the S&P to their highest weekly close ever.

The market is still bracing for a possible Israeli response following last week's missile attack by Iran. Fears over escalating tensions in the Middle East and a disruption in the energy market has the market on edge.

On a brighter note, it was nice to see the port strike 'suspended' (effectually ended) last week and dockworkers back at work after accepting a tentative deal for a 63% pay increase over 6 years. Other details of the agreement will be worked out in the coming weeks.

On the docket for this week, we'll get another look at inflation with the Consumer Price Index (CPI – retail inflation) on Thursday, 10/10. And then again on Friday, 10/11, with the Producer Price Index (PPI – wholesale inflation).

This week also marks the unofficial start of earnings season when big banks JPMorgan Chase, Wells Fargo, and Blackrock (amongst others), announce earnings on Friday.

Next week, the official start of earnings season, continues with Citigroup, Goldman Sachs, Johnson & Johnson, Tesla, and Netflix, to name a handful.

Earnings season is always an exciting time since stocks typically go up during earnings season.

In the meantime, we'll see if the market can, once again, build on last week's gains.

But it's good to know that we are in Q4 as it's considered the best quarter of the year for stocks. 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.

See you tomorrow,