CNBC Daily Open: Stocks can't defy October's gravity

This report is from today's CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Downbeat markets
U.S. markets had a downbeat Thursday. The S&P 500 and Dow Jones Industrial Average fell, while the Nasdaq Composite was near the flatline. Europe's regional Stoxx 600 index fell 0.93%, with only the oil and gas sector rising. Auto stocks sank 2.17% on reports the European Union could pass a vote for tariffs on Chinese electric vehicles on Friday.

Port strike ends
The strike at U.S. East and Gulf Coast ports ended Thursday after the International Longshoremen's Association and the United States Maritime Alliance "reached a tentative agreement on wages," the parties said in a joint statement. The deal extends the current contract until Jan. 15, allowing time for further negotiation on other issues.

Oil spikes on possible Israel retaliation
Oil prices for both West Texas Intermediate and Brent futures soared more than 5% on Thursday on fears Israel could retaliate against Iran's missile strike. When asked whether the U.S. would support an Israeli strike on Iranian oil facilities, U.S. President Joe Biden replied, "We're discussing that."

AI's still hot
Generative artificial intelligence is still the market's darling. Following the close of its funding round that valued OpenAI at $157 billion, the company now has a $4 billion revolving credit line, CNBC has learned. And Nvidia's next-generation AI chip Blackwell is in hot demand. "Everybody wants to have the most and everybody wants to be first," Nvidia CEO Jensen Huang told CNBC.

[PRO] How to play the jobs report
The U.S. jobs report for September, coming out later today, will indicate if the economy will be able to achieve a soft landing or is headed toward a recession. Analysts at JPMorgan break down how the S&P 500 could react, depending on the number of jobs added for September.

The bottom line

Last month, stocks succeeded in defying gravity, soaring instead of letting the historical weight of their poor performance in September bring them down.

But gravity is catching up with stocks in October, which tends to be a volatile month.

On Thursday, the S&P 500 slipped 0.17%, the Dow Jones Industrial Average lost 0.44% and the Nasdaq Composite was mostly flat – defying the broader downward trend thanks to a 3% increase in Nvidia.

While those numbers don't seem too bad, all major indexes are poised for a losing week. The S&P and Dow are down around 0.7% and the Nasdaq is 1.1% in the red so far.

Adding to yesterday's woes, first-time jobless claims for last week increased to 225,000 from the upwardly revised 219,000 the week prior. It was also more than the 220,000 consensus estimate from Dow Jones.

The September jobs report, which comes out later today, will give a clearer picture of the overall U.S. labor market – and likely be the most important catalyst for markets even amid geopolitical turmoil and rising oil prices.

The good news is that, at this point of the rate-cutting cycle, good news shouldn't be bad news anymore. If the number of jobs added comes in higher than expected, markets are likely to react well.

That's because, now that the unemployment rate has been crawling up, plentiful jobs in September will signal an economy that is skirting recession rather than inflation remaining high, as the statistic used to indicate a year back.

Even if the number comes in lower than expected, it might benefit markets in swaying the U.S. Federal Reserve to cut rates another 50 basis points, said David Kelly, chief global strategist at JPMorgan Asset Management.

Ultimately, regardless of the data coming in hot or cold, "I don't think people should get too freaked out either way about this number," Kelly said.

With the jobs report out in about 12 hours, it's too late for second guessing, in any case.

– CNBC's Jeff Cox, Alex Harring and Pia Singh contributed to this story.