US stocks fell on Friday after stronger-than-expected jobs data led investors to reset expectations about when the Federal Reserve will halt its campaign to raise interest rates.
Ministry of Labor November monthly jobs report Payrolls showed growth of 263,000, higher than expected, while unemployment held steady at 3.7%. bloomberg Expect to print 200,000 for a month.
S&P 500 Index (^ The Salafist Group for Preaching and Combat(down by 0.5%, while the Dow Jones Industrial Average fell (^ DJI) by 0.2%, or approximately 70 points. Nasdaq Technology Heavy Composite (^ ix) slipped 0.7%. All three major sessions were off session highs by more than 1% immediately after the release. In other areas of the market, US Treasury yields rose after the issue. The benchmark 10-year Treasury note approached 3.6%, and the two-year rate-sensitive yield rose to just over 4.3%.
“Another strong jobs report and higher wage growth confirmed that the Fed’s job is far from complete. The level of final rates, and how long the Fed will keep rates there.”
Friday’s moves in early trading come after an upbeat week for stock markets, with sentiment lifted by Federal Reserve Chairman Jerome Powell’s indication that there Moderation in the pace of interest rate increasesand China is easing some COVID lockdowns following unrest over restrictive virus controls.
But the jobs report seemed to throw a dent into the market’s plans for a weekly gain and a so-called Santa Claus rally, as stocks tend to rally ahead of the holidays. The higher-than-expected job numbers, as well as continued strong wage growth, provided additional signs that the Fed will continue its campaign to raise interest rates even as it slows the pace.
For the month, stocks had a weak start, with a mixed close across the major averages on Thursday, the first day of December. However, according to Ryan Dietrick of The Carson Groupthe S&P 500 is no more likely to end up gaining than December: the benchmark index for the month has gained 75% since 1950.
Treasury Secretary Janet Yellen said at a conference earlier this week in New York that the jobs report is the most important data point — in addition to inflation data — that policymakers watch in determining monetary decisions as they take action to restore price stability.
“The US labor market is beginning to show initial signs of abating, but only on the margins,” DataTrek’s Nicholas Colas said in an email newsletter Friday, calling the jobs report an “important data point” to watch.
Central bankers are limiting labor market tightening, driven by excessive job creation, which has put upward pressure on wages and contributed to higher prices. But many worry that the labor market momentum that has encouraged officials to push through with rate hikes will cause them to overtake them and send the US economy into recession.
In his 2023 Economic Outlook earlier this year, Bank of America’s Michael Jabin warned that labor market momentum could push the fed funds rate higher to 6%, even with the bank’s forecast calling for a final rate of 5.00-5.25% by mayo. ..
While the jobs numbers have so far reflected resilience in the US employment picture, economists expect job growth to trend lower as the impact of higher interest rates lags. Bank of America expects the unemployment rate to reach 5.5% in 2023, while Morgan Stanley expects 4.3% and Goldman Sachs expects a half percentage point rise to 4.2%.
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Alexandra Semenova is a correspondent at Yahoo Finance. Follow her on Twitter @employee
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