U.S. markets wobbled on Friday after data revealed weaker-than-expected jobs growth in September, and some still stuck to expectations that the Federal Reserve will begin tapering its bond purchasing program. Investors can consider an equal weight exchange traded fund approach to diversify ongoing market risks that contribute to volatility.
Specifically, the Invesco S&P 500® Equal Weight ETF (RSP), which follows the S&P 500 Equal Weight Index (EWI). As its name implies, the benchmark equally weights the 506 members of the S&P 500.
The S&P 500 seesawed between gains and losses on Friday after the Labor Department’s nonfarm payrolls report revealed that the U.S. economy in September reflected the fewest job additions in nine months as hiring dipped at schools and some businesses, reflecting the ongoing troubles with hiring during the COVID-19 pandemic, Reuters reports.
Nevertheless, the unemployment rate dipped to 4.8% from 5.2% in August while average hourly earnings gained a more-than-expected 0.6%.
“I think that the Federal Reserve made it very clear that they don’t need a blockbuster jobs report to taper in November,” Kathy Lien, managing director at BK Asset Management, told Reuters. “I think the Fed remains on track.”
Futures traders on the federal funds rate have priced in a quarter-point tightening from the Fed by November or December next year.
Looking ahead, the third-quarter earnings season will kick off next week, with JPMorgan Chase and other big banks to start the reporting season. Investors will also be focused on the global supply chain problems and labor shortages to gauge the economic recovery.
“I think it’s going to be a dicey earnings season,” Liz Young, head of investment strategy at SoFi, told Reuters. “If supply-chain issues are driving up costs, a company with strong pricing power can pass through those rising costs. But you can’t pass through a labor shortage if you can’t find workers to hire.”
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