Labor market slows down, stock market expects growth

Goldman Sachs strategists have observed that stocks are beginning to ignore weak labor data and expect stock prices to accelerate next year. David Costin's team believes the Fed's expected rate cut this week will further support the stock market. Investors remain optimistic that the recent slowdown in the labor market is only temporary. The cooling of the labor market is seen as a "good wind for corporate profits" and has also opened the door for the Federal Reserve to cut interest rates. Profit margins usually track the difference between price and input costs, including labor. It is estimated that every 100 basis points increase in labor costs will have a 0.7% impact on earnings per share of the S&P 500 component.