Wall St ends down; jobs data feeds fears of more Fed tightening

Record ID: 1705326

  • Title: Wall St ends down; jobs data feeds fears of more Fed tightening
  • Date: 5th January 2023
  • Summary: LOUISVILLE, KENTUCKY, UNITED STATES (JANUARY 5, 2023) (REUTERS) (SOUNDBITE) (English) BAIRD INVESTMENT STRATEGY ANALYST, ROSS MAYFIELD, SAYING: "The markets are down today, and more broadly, you know, over the last month or so, because the Fed is more hawkish. And today, in particular, we got a market of job market data, whether it's initial claims coming in, really historically low, whether it's ADP, private payrolls beating expectations or even yesterday on Wednesday with JOLTS data showing over 10 million job openings for, you know, many consecutive months. So you have a package of data that shows a very, very tight labor market. The Fed is laser focused on that. And so it means they're going to be more hawkish than the market wants." WHITE FLASH (SOUNDBITE) (English) BAIRD INVESTMENT STRATEGY ANALYST, ROSS MAYFIELD, SAYING: "So you're seeing a handful of big tech companies starting to announce, you know, what are headline big layoffs. But a couple of things to remember. I mean, number one, the tech sector is a huge part of the S&P 500. It is not a huge, it does not make up a lot of the labor force. It's something like 0 to 5%. Somewhere in there is what the tech sector is as far as labor force. So, you know, layoffs from companies that potentially over-hired in previous years are in kind of boom times. I feel like we're just kind of getting back to equilibrium. And even if there's additional layoffs at that sector, it is not broadly representative of where the U.S. workers are, you know, manufacturing, retail, those are those are the big employers of people." WHITE FLASH (SOUNDBITE) (English) BAIRD INVESTMENT STRATEGY ANALYST, ROSS MAYFIELD, SAYING: "I'll say a couple of things about recession. I do think, one it's probably inevitable at some point in the next two years, right? The Fed has raised interest rates really at a historically rapid pace. You've seen some effects of that. But as they will tell you, you know, monetary policy changes after the long and variable lag. So we won't start to see the full effect of what they've done, you know, for years down the road."
  • Embargoed: 19th January 2023 21:04
  • Keywords: Baird Ross Mayfield jobs report labor market recession
  • Location: NEW YORK, NEW YORK + LOUISVILLE, KENTUCKY, UNITED STATES
  • City: NEW YORK, NEW YORK + LOUISVILLE, KENTUCKY, UNITED STATES
  • Country: US
  • Topics: Economic Events,North America
  • Reuters ID: LVA002063205012023RP1
  • Aspect Ratio: 16:9
  • Story Text:Wall Street's main indexes closed more than 1% lower on Thursday (January 5) as fresh evidence of a tight labor market ate away at any hopes investors had that the Federal Reserve could pause its rating hiking cycle anytime soon as it keeps focused on inflation.
    Thursday's ADP National Employment report showed a higher-than-expected rise in private employment in December.
    Another report showed weekly jobless claims fell last week.
    On Wednesday, another data set showed a moderate fall in U.S. job openings.
    While a strong labor market would usually be welcomed as a sign of economic strength investors currently see it as a reason for the Fed to keep interest rates high.
    According to preliminary data, the S&P 500 lost 44.74 points, or 1.16%, to end at 3,808.23 points, while the Nasdaq Composite lost 153.53 points, or 1.47%, to 10,305.23. The Dow Jones Industrial Average fell 339.18 points, or 1.02%, to 32,930.59.
    The indexes had pared losses earlier in the afternoon after St. Louis Federal Reserve leader James Bullard said 2023 could finally bring some welcome relief on the inflation front.
    In the previous session, Wall Street's main indexes erased some of their gains after minutes from the Fed's December meeting showed the central bank was laser-focused on fighting inflation even as officials agreed to slow the pace of rate hikes to limit risks to economic growth.
    Earlier Thursday both Kansas City Fed leader Esther George and Atlanta President Raphael Bostic stressed that the central bank's priority was to curb inflation through policy tightening.
    Traders see rates peaking at slightly above 5% in June.
    The more comprehensive non farm payrolls report due on Friday, will be looked to for further clues on labor demand and the rate hike trajectory.
    (Production by: Dan Fastenberg and Chris Dignam)
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