The Job Openings & Labor Turnover Survey (JOLTS) reported 7.67 million job openings in the month of July, a month-over-month decline that fell below estimates of 8.1 million. This marks the lowest level since January 2021. While the labor market is one of the key economic indicators that could sway the Federal Reserve’s September interest rate policies, how can this print influence the broader markets and investors?
Glenmede VP of Investment Strategy Mike Reynolds joins Catalysts to give insight into the market’s (^DJI, ^IXIC, ^GSPC) reaction to the latest JOLTS data and what it means for the overall market moving forward.
"We’re coming off of one of the most tight labor markets we’ve seen in the post-COVID era, where there were a lot of dislocations. Businesses had a hard time finding employees. If you look at a time series of job openings now, we’re looking pretty close to where we were pre-pandemic," Reynolds elaborates. "We’re coming out on the side here that this is more like normalization. We’re really not seeing the bottom fall out of the labor market yet."
Reynolds stipulates, though, that "you don’t want normalization to turn into deterioration."
While watching economic data in his peripherals, Reynolds is maintaining a "neutral position right now in our portfolios" as equities deal with September uncertainty.
"[We’re] recognizing we’re in a late-stage expansion. We think the risks are actually relatively balanced here. But our concern with some of the valuations we’re seeing on the, particularly, the large-cap growth side. And when it comes to positioning, we’re watching sentiment very closely. You really want to be on your toes for when the bottom starts to fall out and you get full capitulation. But we’re nowhere close to that."
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