There are two concerns for the stock market in Friday’s jobs report, according to the former macro trader at SAC Capital

Friday’s August monthly jobs report points to a further slowdown in jobs, a welcome sign for markets and the Federal Reserve’s inflation struggle.

But Peter Corey, co-founder and chief market strategist at Pave Finance, still sees two worrying signs in the report and isn’t entirely convinced the Fed is done with its historic period of rate hikes.

“I’m trying to look at the data to see what’s going to move the market,” Corey, a former macro trader at Steve Cohen’s SAC Capital, told MarketWatch on Friday. “In my opinion, that number of jobs was a lot higher than what people are seeing.”

While he is focused on August’s higher-than-expected 187,000 jobs, a more important factor he believes may be that the average work week rises to 34.4 hours while contract worker employment falls.

Corey said a continuation of the trend is important as it could put upward pressure on wages, with full-time workers likely to fill the gap. “If average earnings rise, that could prompt the Fed to tighten,” Corey told MarketWatch on Friday.

His second focus was the unemployment rate, which rose to 3.8% in August, which the Fed’s Sahm Rule says could be a sign of a looming economic recession. The rule broadly states that the US has entered a recession or is about to enter a downturn if the 3-month moving average of the unemployment rate rises half a percentage point from the year-earlier low.

In August, the three-month moving average was 3.6%. The rule would be triggered if the current unemployment rate holds for two more months, Corey said.

Claudia Sahm, the former Fed economist who gave her name to the Sahm Rule recession indicator, told MarketWatch in December that her base case is that the US avoids a recession. Importantly, she also believed that the Fed should refrain from raising interest rates above 5%, which she did not.

The Federal Reserve raised interest rates to a 22-year high in the 5.25% to 5.5% range in July, leaving the door open to possible further rate hikes this year to keep inflation under control.

See: The rise in unemployment to 3.8% could be a mirage of summer jobs

Corey also thinks too little attention was paid to Chairman Jerome Powell’s speech at Jackson Hole in late August when he said “inflation is responding to tightening jobs more strongly” than it has in recent decades. “They are very focused on the labor market,” he said.

Pave Financial offers a consumer and professional product that allows individuals to “invest in stocks like the 0.1%” through an app. It is based on an algorithm that optimizes investor portfolios based on their current holdings and preferences.

US stocks ended Friday mostly higher while posting strong weekly gains. The S&P 500 SPX is up 17.6% year over year, while the Dow Jones Industrial DJIA is up 5.1% and the Nasdaq Composite Index COMP is up 34.1% in 2023 so far after eight months ahead of Labor Day was at its best since 2003.

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