The Dow Closes Higher on Debt Ceiling Deal and Ahead of Friday’s Critical Jobs Report

The Dow briefly rose above its 50-day moving average of 34,916.88 during trading hours, but now needs to gain 0.4% to get back to that level. The index has not closed above that key technical level since Sept. 8, marking the longest stretch below that level since a period between February and April of 2020.

“The market has just been focusing on the debt ceiling for the past two weeks,” says Dave Wagner, portfolio manager and analyst at Aptus Capital Advisors. “The market is now focused on the nonfarm payrolls.”

Senate Majority Leader Chuck Schumer (D-N.Y.) said a deal between Republicans and Democrats had been reached to extend the government’s debt ceiling until December.

“This ‘removes’ a high-risk event and given the recent selling pressure we are seeing a sharp move higher,” writes Michael Reinking, senior market strategist at the New York Stock Exchange.

Now, the U.S. market is looking forward to the U.S. jobs report Friday, which measures nonfarm payrolls. Investors want to see that, as pandemic-related benefits expire, people are incentivized to go back to work.

Friday’s employment report from the Bureau of Labor Statistics will make all the difference on the market’s view of the job market and economic recovery. Economists expect September payrolls to have increased by 500,000.

Investors may have gotten an early read on the job market, as weekly initial jobless claims were 326,000, better than the expected 345,000 and lower than last week’s result of 364,000. 

“The next two payroll reports are critical,” wrote Tom Graff, head of fixed-income at Brown Advisory. “During the first half of 2021, many blamed weak labor force participation on generous unemployment benefits. As of this payroll report, those have expired completely.” 

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