the November activity report dealt a heavy blow to stocks today, with data from the Labor Department suggesting the Federal Reserve is far from over its efforts to slow the economy. Overall, the US added a higher-than-expected 263,000 jobs in November, while the unemployment rate remained at 3.7% and average hourly wages rose 5.1%. – year. The stock was down sharply at first on the news, but the end of the day wasn’t as bad as it started.
“Investors are focused on long-term inflation and fear that the Federal Reserve’s rate hikes and balance sheet reductions will cause inflation to decline. economictherefore today’s news that the private sector’s hourly earnings increased by 0.6%, which exceeded the 0.3% expected, is a painful interruption during what was an impressive recovery at the end of the fourth quarter, “said José Torres , senior economist at Interactive Brokers. Fed Chairman Jerome Powell means that labor market weakness is required to moderate inflation for decades.”
As a result, the main market index suffered losses ranging from 0.9% to 1.6% at the beginning of the session despite concerns that the central bank may have to hold longer interest rates to keep costs down.
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However, the devil is in the details, said Daryl Patten, senior vice president and financial advisor at asset management firm Fort Pitt Capital. While job reports may be on the surface, Patten says it’s important to take a closer look. Most of the job growth, he said, came from the service sector, while construction and manufacturing were the two sectors that saw the slowest pace of job gains.
“This supports our thinking about the overall shift in spending from goods to services and accordingly yesterday’s ISM manufacturing report,” said Patten. “As the pandemic hit in the 2020s, consumer spending shifted away from services (think travel, restaurants, etc.) to real goods. As interest rates rise, we see a return to service costs. “
This thought may have caused the stock to break out of its lower session. Even though it is very low in the open air, the technology is heavy Nasdaq Composite ended the day down 0.2% at 11,463 and wider S&P 500 Index was down 0.1% at 4,071. The blue-chip Dow Jones Industrial Average It edged higher at the close, ending up 0.1% at 34,429.
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