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Futures are modestly higher this morning as markets are just digesting the September non-farm payrolls report. Michael Jordan claimed he had nothing left to prove when he announced his retirement on this day in 1993, but he ultimately realized he did and was back on the court in March 1995. The stock market may have felt it had nothing left to prove when it was at its highs last July, but just over two months later it now has plenty to prove, and bulls are starting to get impatient.

The September payrolls report just hit the tape, and the headline reading came in much better than expected as total payrolls increased 336K versus forecasts for an increase of 170K. While the headline number was much better than expected, the Unemployment Rate was unchanged at 3.8%, which was higher than the 3.7% forecast. Likewise, average hourly earnings were also slightly weaker than expected. The initial reaction in futures has been a sharp sell-off in stocks and bonds as the headline number topped forecasts, but underneath the surface, the report wasn’t as hot as it looked.  Job creation is rising, but the cost of incremental workers hasn’t been accelerating.

In terms of market reactions to recent Non-Farm Payrolls reports the fact that the market is swinging widely shouldn’t come as a surprise. On the last 12 report days, the S&P 500’s average daily move on Non-Farm Payroll report days has been 1.1% (up or down. That’s up sharply from a year ago and near the high end of its post-financial crisis range.

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