December 5, 2022

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U.S. stocks fell after the employment report

U.S. stocks fell after the employment report

U.S. stocks fell on Friday after a recent employment report showed that the U.S. job market added strong but slower jobs in May.

The S&P 500 was down 1%, the Dow Jones Industrial Average was down 156 points or 0.5% and the Nasdaq Composite was down 1.7% in morning trade. All three indicators are heading towards a weekly decline.

In securities markets, 10-year U.S. Treasury yields rose to 2.973% on Thursday from 2.914%. Yields and prices move in the opposite direction.

Employers in the United States 390,000 jobs were added last monthThis is the lowest growth rate since April last year, while the unemployment rate was 3.6%. Wages rose 5.2% year-on-year from 5.5% in April.

Economists polled by the Wall Street Journal expect 328,000 jobs to be added last month. They found that the unemployment rate had fallen slightly to 3.5%, the lowest level in 53 years before the Govt-19 epidemic hit the United States in February 2020.

Federal Reserve officials are watching closely Labor market situation They determine how much and how quickly interest rates will rise in the coming months.

One of the points of concern of government employees is that the labor market is strong-willed In addition to high inflation Because competition for workers increases the bargaining power of wages. Federal Reserve Vice President Lyle Brainard said Thursday Support plans to raise interest rates Later this month, again at a meeting in July at half a percentage point.

Frank Hollande, chief global strategist at Danske Bank, said before the report was released that he would look into whether wages had risen last month. This – along with the recession in hiring – could cause markets to stumble, he said.

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“It was an unfortunate cocktail,” he said. “Then we have a huge level of inflation, and then the central bank will continue to tighten.”

Amid a series of record setbacks in the United States, economists are watching for possible wave directions. Anna Herttenstein of the Wall Street Journal looks at how interest rates on high inflation, market sales and recession risks are testing the growth of American workers. Photo: Oliver Duller / AFP

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Markets have experienced high volatility in recent months as investors try to assess the combination of variables that blunt their expectations and heighten fears about a recession.

But in the last two weeks, some fluctuations have subsided.

Justin Vix, stock trading director of Stifel Nicolaus, said last week saw an increase in the number of buying orders among his customers, which he believes is directly related to the low volatility in the core stock market.

The Wall Street Fear Scale, the Cboe Volatility Index, traded back in the mid-1920s, and the VVIX, VIX measure of how volatile it is, is trading at its lowest level in two years. VVIX is based on the optional prices of the volatile index.

“Relieving the oscillations has given some people the comfort of the idea that they can put money back into business,” he said. Wicks.

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Tightening the Federal Reserve’s financial position could control inflation, but also weigh on growth and the housing market. Russia’s war on Ukraine Moreover, China’s policy of not spreading the corona virus has increased supply chain barriers and led to higher inflation.

Oil prices were also above $ 100 a barrel, raising energy and fuel costs. World oil quality Brent oil futures rose 0.4% to $ 118.08 a barrel.

“You have a very strong US economy now, but we have very high inflation, and it has not slowed down,” he said. Holland said. “Eventually, this will bring consumers to a point where they can tell, let’s look at our budget, and tighten up a little here and there. If everyone backs down a little bit, you go into recession.”

Outside, the Stoxx Europe 600 is almost flat. Markets in the UK, Hong Kong and China are closed for the holidays. Japan’s Nikkei 225 ended 1.3% higher, while South Korea’s Kospi 0.4%.

Traders work on the site of the New York Stock Exchange.

Image:
Michael Nagel / Bloomberg News

Write to Caitlin Astroph [email protected]

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