the Nonfarm payroll data The report was hotter than expected and was exacerbated by other labor market indicators that say the FOMC will not cut interest rates this year. The headline number was more than double expected. Unemployment fell to 4.1%, and wages rose by about 4%. Job and wage growth suggest that one of the Fed’s mandates has been covered, while another still needs attention.
The only bad news is that manufacturing employment has declined, but it is a small part of the economy, offset by gains in government jobs and broad-based strength in the services sector. The bottom line is that labor markets were strong at the end of 2024, and we are heading into a period of strong seasonal hiring. Employers will ramp up hiring over the next few months to cover Easter, spring break and summer needs.
The U.S. job market is strong, healthy, and expanding
JOLTs, Challenger, and initial claims data are consistent with labor market strength. JOLT data on employment rose by about 400 basis points in November, contrary to the expected contraction. This went beyond consensus and indicated sufficient job opportunities to fuel economic expansion.
December Challenger characters They are more interesting, and in line with this year’s trend, compared to last year, but they show a marked decline in layoffs in the fourth quarter compared to the previous quarter. Although it is not an overly bullish indicator, it does indicate that the end of the recent labor market volatility will come soon and is exacerbated by employment data. December hiring plans were tepid at nearly 8,000 compared to September’s 403,000, the strongest month of the year. However, they are in line with seasonal trends, falling in the middle of the expected range, with the pace of hiring expected to accelerate as Trump’s policies take effect.
The latest and leading labor market data, and initial unemployment claims, are strong. The data, released just days before the nonfarm payrolls report, shows initial claims falling to a long-term low and total claims falling more than 2% compared to a year ago. This indicates a sharp contraction in layoff activity at the end of the year, consistent with Challenger data to indicate an end to labor market volatility and a solid foundation for labor market expansion as the year progresses.
Ten-year Treasury bonds rise in line with price expectations
The impact of labor market data on the market is the possibility of lowering interest rates, he pointed out CME FedWatch toolThey fall. The odds of two cuts are less than 50%, and one cut is questionable, a view reflected in Treasury yields. The yield on 10-year Treasury bonds rose more than 100 basis points to hit a 52-week high.
The Treasury market is showing some signs of resistance at this level, but it may not last long if other data is strong. The next crucial piece of the puzzle is CPI and retail sales data, which are due soon. Another month of hot inflation data could lead to a rate cut and return TNX to 5.0% or higher.
Standard & Poor’s 500 NYSEARCA: SPY It was withdrawn in reaction to the news, but this knee-jerk reaction will likely be viewed as a buying opportunity in hindsight. Hot labor market data and the underlying cause, economic health and expansion, are relevant to consumer health, spending and S&P 500 earnings across sectors. The crucial support target is near the recent lows at 5875 and is unlikely to be broken.
The most likely scenario is that the market will trigger a buy signal soon, sending the S&P 500 higher to hit a new all-time high. The risk is that the Federal Open Market Committee will have to raise interest rates later this year to combat inflation, increasing the odds of an economic downturn and recession.
Before you consider the SPDR S&P 500 ETF Trust, you’ll want to hear this.
MarketBeat tracks the highest-rated and best-performing research analysts on Wall Street and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches up… and the SPDR S&P 500 ETF Trust was not on the list.
While the SPDR S&P 500 ETF Trust currently has a “Hold” rating among analysts, highly rated analysts believe these five stocks are better buys.
View the five stocks here
Almost everyone likes strong dividend-paying stocks, but high yields can signal risk. Discover 20 high-yield stocks that pay an unsustainably high percentage of their dividends. Enter your email to get this report and avoid the trap of high profits.
