Stock Market Update

The S&P 500 futures are down two points and are trading fractionally below fair value, the Nasdaq 100 futures are down 25 points and are trading 0.1% below fair value, and the Dow Jones Industrial Average futures are down 83 points and are trading 0.2% below fair value.

Private-sector payrolls increased by 233,000 (Briefing.com consensus 105,000), according to ADP, following an upwardly revised 159,000 (from 143,000) in September.

The key takeaway from the report is that the payroll gains were broad based by sector, region, and establishment size, underscoring the point that economic activity remains solid and not at all consistent with an economy on the cusp of a recession.

Real GDP increased at annual rate of 2.8% in the third quarter (Briefing.com consensus 3.0%), a slight deceleration from the 3.0% growth rate registered in the second quarter. The GDP Price Deflator was up 1.8% (Briefing.com consensus 2.3%) versus 2.5% in the second quarter.

The key takeaway from the report is that GDP growth was powered by healthy levels of consumer spending. Personal consumption expenditures increased 3.7%. That was the strongest growth rate since the first quarter of 2023 and well in excess of the prior 10-quarter average of 2.3%. The PCE component contributed 2.46 percentage points to real GDP growth in the third quarter.