SPSM - The Jobs Report Does Not Take A March Rate Cut Off The Table

2024-02-02 20:34:17 ET

Summary

• Stocks initially dropped after strong job growth in January, but it wasn't as strong as believed.
• The increase in jobs and wages can lead to inflation.
• However, the decrease in average work hours counters the income created by new jobs and higher wages, suggesting the jobs report may not be inflationary.

Stocks swooned at the open on Friday after the Bureau of Labor Statistics announced that payrolls rose a stunning 353,000 in January, which was well above the consensus estimate of 185,000. The prior two months were revised up by 126,000 for a net gain of 479,000. Technology stocks bucked the trend, as Amazon (AMZN) and Meta Platforms (META) shined with the release of their fourth quarter results, but the average stock was lower, and the Russell 2000 small-cap index fell close to 2% early on. Bonds also were sharply lower, as the knee-jerk reaction to the news was that a rate cut in March is not a consideration with the strength exhibited by the labor market. Really?...

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