US stock markets are exaggerating despite the slowdown in the labor market - risk of overvaluation

US stock markets are exaggerating despite the slowdown in the labor market - risk of overvaluation

According to a report by www.ad-hoc-news.de, the US labor market has cooled slightly recently. U.S. jobs data showed 150,000 new nonfarm jobs were added in October, lower than expected. The unemployment rate also rose to 3.9%, which exceeded expectations. These developments led to a dynamic continuation of the upward movements on the stock markets.

According to my analysis, this slowdown in the labor market could lead to the US Federal Reserve not deeming further interest rate hikes necessary. This could have an impact on the bond market as a fall in yields could lead to an easing of financing conditions. However, there were also strong signals in the US services sector that point to growth.

Due to these developments, the stock markets in the USA have already recovered more than 50% of their price losses. However, this price rally could lead to a major exaggeration. It is therefore questionable whether the US Federal Reserve will be satisfied with the current data.

My assessment is that both the downside potential in bond market yields and the upside potential in stock market prices are limited. In the short term, however, prices on the stock market are massively overbought due to the strong price recoveries and could enter into a consolidation in order to avoid falling into a major exaggeration again.

The US indices have already reached interesting chart levels or are about to do so, which could create potential hurdles. Should consolidation occur, it could also provide opportunities for speculative investors to take a small short trade to profit from a pullback.

Overall, the situation on the stock markets in the USA remains particularly dynamic and susceptible to strong price fluctuations. Investors should therefore keep long positions running and keep an eye on possible setbacks in order to make the most of opportunities.

How www.ad-hoc-news.de reports, it is important to closely monitor developments in the US stock markets and be prepared for unexpected developments in order to invest intelligently.