What's going on?

Data out on Friday showed that the US economy added more jobs than expected last month.

What does this mean?

There had been a couple small signs that the Federal Reserve�s (the Fed) aggressive interest rate hikes might’ve started chilling the hot-to-touch jobs market down. For one, data out earlier in the week showed that cautious employers slashed more than a million job openings in August � one of the biggest drops in two decades. And for another, Friday�s report showed the US added only 263,000 jobs in September, the lowest monthly figure since April 2021. But that�s still not enough: demand for workers has calmed down a bit, but many businesses are still under-staffed, and forced to compete for workers in what�s still a shrinking labor force. That might be why the handy litmus test of wage growth � something the Fed�s trying to tame to help rein in inflation � still came in at a strong 5% versus the same time the year before.

Why should I care?

The bigger picture: The Fed wants to fire you.
The unemployment rate unexpectedly fell to a new 50-year low of 3.5% last month. But with the Fed’s prediction for that figure to hit 4.4% next year, there’s a good chance the central bank will take action to make that reality. After all, it�s said that taming inflation won�t just require �below-trend� growth, but straight-up job losses. That�s why most traders are now pricing in a fourth-straight 0.75 percentage point hike next month.

For markets: Investors say yikes.
The S&P 500 fell when the news broke, as investors anticipated even more pain for US companies and the wider economy. And that might not be the end of the turmoil for a market that’s just seen its worst September in 20 years: a slew of banks from Goldman Sachs to HSBC reckon the index will be lower at the end of the year than it is now.