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A hot December jobs report capped off a week in which investor concerns over “higher for longer” interest rates dragged down stocks.
You are viewing: What to know this week
The S&P 500 (^GSPC), the Nasdaq Composite (^IXIC), and the Dow Jones Industrial Average (^DJI) all ended the week down around 1%.
The biggest concern driving markets is that inflation doesn’t continue its downward trend toward the Federal Reserve’s 2% target. Two key readings will greet investors in the week ahead on that front. Tuesday will bring a reading on wholesale inflation before the more widely followed Consumer Price Index (CPI) is set for release on Wednesday morning.
Updates on retail sales, inflation expectations, and housing activity are also on the schedule.
In corporate news, quarterly results from JPMorgan (JPM), Citi (C), Wells Fargo (WFC), Bank of America (BAC), BlackRock (BLK), Goldman Sachs (GS), Morgan Stanley (MS), and Taiwan Semiconductor (TSM) will highlight the week.
At close: January 10 at 4:56:48 PM EST
^GSPC ^DJI ^IXIC
The December jobs report showed the US labor market remains on more solid ground than initially thought. Data from the Bureau of Labor Statistics released Friday showed 256,000 new jobs were created in December, far more than the 165,000 expected by economists and higher than the 212,000 seen in November.
Meanwhile, the unemployment rate fell from to 4.1% from 4.2% the month prior. Revisions added to the narrative too. The cycle high for the unemployment rate initially was 4.3% in July, but that figure was revised down to 4.2% in Friday’s release.
Overall, the report has many strategists confident the Federal Reserve will hold off on further interest rate cuts for now. Some on Wall Street think it may have even cracked the door open for the Fed to consider rate hikes in 2025.
“Our base case has the Fed on an extended hold,” Bank of America Securities US economist Aditya Bhave wrote in a note to clients on Friday. “But we think the risks for the next move are skewed toward a hike.”
Bhave noted that the bar for the Fed to hike is high since the central bank has noted that interest rates remain restrictive. But should the Fed’s preferred inflation gauge — the Personal Consumption Expenditures metric, excluding volatile categories like food and energy — reaccelerate or inflation expectations move higher, a hike could be on the table.
Read more: Jobs, inflation, and the Fed: How they’re all related
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Morgan Stanley chief US economist Michael Gapen said the report showed “Fed cuts are about inflation now.”
As of Friday afternoon, markets were pricing in just one interest rate cut for 2025. Markets don’t see a more than 50% chance the Federal Reserve cuts interest rates until at least the end of its June meeting, per the CME FedWatch tool.
Source link https://finance.yahoo.com/news/two-key-inflation-prints-await-investors-as-rate-fears-rattle-markets-what-to-know-this-week-125112217.html
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