Investors are gearing up for a busy week as the September U.S. employment report looms, alongside the looming threat of a federal government shutdown. Key economic indicators, including the Institute for Supply Management’s (ISM) monthly data for the manufacturing and services sectors, are set to be released, while major companies such as Nike (NYSE:NKE) and Carnival Corp. (NYSE:CCL) will report their latest quarterly results.
Nonfarm Payrolls in Focus
All eyes are on Friday’s release of September’s nonfarm payrolls, which will provide insight into the current state of the U.S. labor market.
Federal Reserve officials have emphasized the importance of monitoring employment trends amid cooling job growth. When the Fed cut interest rates by 25 basis points earlier this month, it signaled a priority on supporting the labor market over immediate inflation concerns.
Projections from Fed members suggest additional rate cuts could be possible before year-end. While lower rates can stimulate hiring and investment, they may also contribute to rising prices.
Economists expect September to add 51,000 jobs, up from 22,000 in August, with the unemployment rate holding steady at 4.3%. Observers caution that elevated inflation could influence how aggressively the Fed moves.
“A jobs number [less than] 75,000 will probably keep the Fed on track for a […] cut [at its next meeting on October 29], but something [greater than] 115K with the core PCE just below 3% could spur” Fed Chair Jerome Powell and his colleagues to skip a reduction at the gathering, analysts at Vital Knowledge said in a note.
Potential Government Shutdown
Concerns remain that a U.S. government shutdown could delay the jobs report. Lawmakers face a Tuesday deadline to approve a stopgap funding bill to prevent the federal government from entering its 15th partial shutdown since 1981.
Republicans control both chambers, but Democratic votes are needed to pass the bill. Democrats have so far rejected short-term measures, demanding that any proposal undo Republican cuts to healthcare programs.
Congressional leaders are scheduled to meet President Donald Trump at the White House on Monday. Over the weekend, Trump told Reuters he has “the impression” that Democrats may want to reach an agreement.
ISM Data Releases
The upcoming ISM reports on September’s manufacturing and services activity will proceed regardless of political developments.
The manufacturing PMI is projected at 49.1, slightly up from August’s 48.7, but still below the 50-point mark separating contraction from expansion. Services PMI is expected to hold at 52.0, keeping the sector—responsible for over two-thirds of U.S. GDP—within growth territory. Employment components of the ISM may be monitored, though historically they have been poor predictors of the nonfarm payrolls report.
Nike Earnings
Nike will release its quarterly report after the market closes on Tuesday. Investors will watch for progress in the brand’s ongoing turnaround under CEO Elliott Hill, who returned last October to address declining sales, market share loss, and strategic missteps that had strained relationships with retailers.
Fiscal first-quarter revenue is expected to decline in the mid-single digits, as Hill invests in Nike’s running and sneaker lines to boost demand.
CFO Matthew Friend previously warned in March that it would take “several quarters” to clear older inventory, possibly requiring discounting that could pressure margins. Nike also plans to reduce reliance on Chinese production to avoid broad U.S. tariffs.
Despite challenges, signs of recovery are emerging. JD Sports, a major Nike retailer in the UK, said last week that the U.S.-based company is doing “all the right things in terms of resetting” its operations.
Carnival Earnings
Carnival Corp. will be among the first to report on Monday. Investors are watching how the cruise operator has benefited from growing consumer interest in sea-based vacations amid economic uncertainty.
Rising demand has boosted Carnival’s margins to near 20-year highs in Q2. The Holland America and Princess Cruises operator raised its full-year profit outlook in June, noting that the business has shown “remarkable resilience amid heightened volatility.” Analysts also pointed out that favorable exchange rates have improved the second-half forecast.
Shares of Carnival, with third-quarter per-share earnings projected at $1.32 according to Bloomberg consensus estimates, have climbed over 22% this year.
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