Dow Jones & NASDAQ Stocks Dropped but US Economy Boosted in 3rd Quarter

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The stock indexes closed Friday’s trading session with an alarming condition. The NASDAQ 100, Dow Jones Industrial, and the S&P 500 dropped 3.9%, 2.11%, and 2.8%, respectively. The tech sector was the session’s straggler, as it declined around 4.12%. The energy sector was contrarily considered the session’s leader with a drop of just 0.74%.

Moreover, WTI crude oil was boosted by $90 per barrel. The US 10-Year Treasury earnings climbed to 3.88% with a boost of 5.2 basis points. It is noteworthy that the 2-Year Treasury earnings also increased by around 4.31%. The Atlanta Federal Reserve boosted its latest GDP-Now reading allowing it to predict GDP growth in real-time.

The Powerful US Economy in the 3rd Quarter of 2022

Meanwhile, the “Nowcast” has become comparatively realistic after more economic data was released across the quarter. It is currently estimated that the economy will boost by around 2.9% in the 3rd quarter. This is supposedly higher compared to its previous estimation of 2.7%. Today’s report from the US Bureau of Labor Statistics about US Nonfarm Payrolls approved the estimations.

The last couple of updates have shown a considerable swing in September. The estimate for the 3rd quarter growth was around 0.3%. The US economy appeared to show a strong 3rd quarter amid 2 sequential quarters of downfall. However, the stocks were negative moving into the final hour of Friday’s trading session.

Canada Reported Employment Change Numbers

However, Canada also reported its jobs to change numbers that came in higher than expected for the month of September. The Canadian economy managed to add 21,100 employments compared to the estimated 20,000. It effectively finished a 3-month drop that experienced the country decreased by 114,000 during that time period.

The numbers couldn’t offer more excitement to investors with 21,100 new jobs including 15,400 part-time jobs. It clearly indicates that just 5,700 people will get full-time employment opportunities. It is important that the education sector added most of these improvements. The major reason shows the new school year in Canada normally starts in September.

The Increasing Interest Rates of the Bank of Canada

However, the positive result was unable to maintain any real confidence and certainty. It clearly indicates the increased interest rates of the Bank of Canada are actually losing the Canadian economic speed. The Bank is the largest US trading partner and will ultimately spur wave effects within the US economy.

The stock indexes remained in the red halfway through the trading session on Friday. The S&P 500, NASDAQ 100, and the Dow Jones Industrial Average dropped 3%, 1.6%, and 2.1%, respectively. The XLK (tech sector) was sluggish with a decline of 3.4%. However, the XLE (energy sector) was the session’s premier with an increase of around 1.1%.

Higher Wages Demand After Increasing Inflation

Meanwhile, a wage-price twist happened when the price of goods was boosted as a result of increased wages. But it also sparked higher wage demands from workers after the higher prices or inflation. It eventually created an everlasting loop of price and wage increases. Comparing average hourly earnings to inflation is a method most investors can evaluate the existence of a wage-price twist.

The supposed higher earnings than inflation and considered a warning sign for the loop to start forming. In September, wages increased by 0.3% compared to the month of August according to the estimations. However, the last reading showed an improvement of 0.6% month-over-month when looking at the essence consumer price index.