Stocks went up on Friday, but only after going up and down several times. This was because Wall Street didn’t know how to interpret the latest data on the US job market and what it meant for interest rates and the chances of a recession.
The S&P 500 went up 1.4% after an even bigger rally in the morning was completely erased, only to come back in the afternoon.
The Dow Jones Industrial Average went from gaining 610 points to losing 62 points and then went up 1.3%, while the Nasdaq composite went up 1.3%.
After a report from the US government showed that the unemployment rate went up a bit in October, employers added fewer jobs than they had a month earlier, and wage growth slowed a bit, the markets went through another round of wild swings.
Wall Street rallies:
At first, stocks went up because the data gave some people hope that the Federal Reserve’s efforts to hurt the job market might be working and might help bring down the country’s high inflation. But the slowdown was still not as bad as economists thought it would be.
And it didn’t change many people’s ideas about what will happen next: the Fed will keep raising interest rates to levels that haven’t been seen in this millennium. This will slow down the economy and make stock prices and other investment prices go down.
Even though the S&P 500 rose 50.66 points on Friday to 3,770.55, this was the first week in the last three that it lost money.
On Friday, the Dow went up 401.97 points to 32,403.22, and the Nasdaq went up 132.31 points to 10,475.25. However, both fell for the week.
While Wall Street thought about the jobs report, markets all over the world went up. This was because there was still talk that China might change its “zero-COVID” policy, which would boost what has been a major source of growth for the world economy for a long time.
This week, Fed Chair Jerome Powell pointed to the fact that the job market is still very strong as one reason why the central bank may have to raise rates more than they had thought. Such moves could lead to a recession, which is why investors were so interested in the monthly jobs report from the US government on Friday.
Some analysts said that the slight rise in the unemployment rate to 3.7% in October was good news for the markets. This made it more likely that September’s rate of 3.5% was not the bottom. Big tech companies like Amazon have recently said they will stop hiring or even let people go because they think the economy is getting worse.
This could keep the job market from getting into a “wage-price spiral,” which is when a tight job market drives up wages so much that it makes prices go up even more. Other analysts, on the other hand, focused on the jobs market, which is still strong and continues to hire more people than expected.
If anything, the fact that Friday’s jobs report was better than expected means that “Fed officials are going to have to step on the brakes even harder” to slow down the economy and get inflation under control,” says Russell Price, chief economist at Ameriprise.
On Friday, a number of investors and banks raised their expectations for how high the Fed will take short-term interest rates at the end of next year. Many are looking for something above 5%.
That’s a level the economy has only seen a few times in the last 20 years, and it’s a big change for the federal funds rate, which started the year at almost nothing.
The investment strategy group at fund giant Vanguard said that all of Friday’s data on jobs does “nothing to change Vanguard’s Fed expectations.” Instead, it puts more attention on next week’s report on how bad inflation was in the whole country in October.
In the minutes after the US jobs report came out, markets all over the world were shaky.
The yield on the two-year Treasury, which is usually a good indicator of what people think the Fed will do, went up and down a few times before it started to go down.
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