S&P 500 ended in the green on Friday even after the U.S. Labour Department said the U.S. economy added more than expected jobs in October.
What does that mean for the Fed?
Nonfarm payrolls went up by 261,000 versus 205,000 expected, suggesting the labour market remains tight despite the aggressive rate hikes.
Earlier in the week, Fed Chair Jerome Powell said it was a bit too early to consider “pausing” and, in fact, the terminal rate was now expected to be higher than previously estimated (read more). And this monthly jobs report does justify that stance.
Put together, that doesn’t paint a very attractive picture of the equities market that’s already down over 20% for the year.
Rob Baron shares his outlook on the stock market
None of it, though, is enough to scare the billionaire investor Ron Baron into not investing in the stock market. Speaking with CNBC’s Becky Quick, he said:
You can’t find anything that’s expensive right now. So, if I had more money to invest, I’d invest it. I’m fully invested. We get more money in chunks, and as soon as we get it, we invest it. I find things everywhere. This is a great time to invest.
Remember that Baron is not calling in a market bottom. What he’s suggesting is picking quality names that are selling at a deep discount and taking a long-term view that goes beyond the clouds of inflation and tightening.
On the bright side, unemployment rate ticked up to 3.7% in October versus 3.5% expected. And the jobs growth, even though it was better-than-expected, was still at its slowest pace since December 2020.
Baron is also constructive because he’s very optimistic about economic growth in the long run.