US Economy Adds 517,000 Jobs in January, Dow Jones Closes Down 0.1%
By The U.S. economy added 517,000 jobs in January, far exceeding economist expectations of 187,000, while the unemployment rate fell to 3.4%, its lowest since 1969.[0] Hourly earnings on average increased by 0.3%, as anticipated.[1] This news sent the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite lower, with the Dow closing down 0.1%, the S&P 500 closing down 1.5%, and the Nasdaq Composite closing down 3.25%.
Yields were up, with the 10-year Treasury yield (US10Y) 13 bps higher at 3.53% and the 2-year yield (US2Y) up 21 bps at 4.30%. The U.S. dollar index (DXY) rose 1.1% as well The market’s expectations for a rate in the range of 5% to 5.25% increased to 53.7% compared to yesterday’s expectations of 31.9%.[2]
The jobs data spurred selling in fixed income, sending yields higher.[3] The yield on the 10-year Treasury bond rose 14 basis points to 3.54%, and the 2-year yield increased 21 basis points to 4.30%. Meanwhile, the U.S. dollar index (DXY) gained 0.6%.
The Federal Reserve raised its key rate by a quarter-point and indicated that there will be at least two additional increases.[4] Given that Wall Street is expecting the Fed to only make one additional hike in March, this guidance could have been seen as a letdown.[5] Jerome Powell, Chair of the Federal Reserve, seemed to inspire enthusiasm by mentioning deflationary developments, with a positive outlook for the American economy and no worries about loosening financial circumstances.[5] Friday's January jobs report revealed an increase in hiring and a decrease in unemployment, bringing it to the lowest level since 1969.[5] Wage gains slowed to 4.4%, the lowest since August 2021; however, this was still[5] Despite this, the hiring uptick and the lowest unemployment rate have increased the likelihood of two more interest rate hikes.[5] The ISM U.S. manufacturing index was not strong, however, the ISM's service-sector indicator showed a considerable increase.[5]
The stock of Ford Motor Co.[1] The F Stock closed at[1]
0. “Stock market news live updates: Stocks wobble after jobs report shocks, Big Tech results disappoint” Yahoo News, 3 Feb. 2023, https://news.yahoo.com/stock-market-news-live-updates-february-3-2023-122332716.html
1. “Dow down modestly, Nasdaq falls sharply after blowout U.S. jobs report, disappointing corporate earnings” MarketWatch, 3 Feb. 2023, https://www.marketwatch.com/story/u-s-stock-futures-tumble-ahead-of-jobs-data-with-tech-under-pressure-as-apple-amazon-and-alphabet-fall-after-results-11675422809
2. “Stock Market News Today – Stocks Fall after Strong Labor Report Scares Bulls” TipRanks, 3 Feb. 2023, https://www.tipranks.com/news/stock-market-news-today-u-s-futures-plunge-on-weak-tech-results
3. “S&P 500, Dow, Nasdaq slump as job gains raise Fed worries (SP500)” Seeking Alpha, 3 Feb. 2023, https://seekingalpha.com/news/3932039-sp-500-dow-nasdaq-slump-as-job-gains-raise-fed-worries
4. “Stocks fall on Friday, but S&P 500 notches winning week as strong 2023 continues” CNBC, 2 Feb. 2023, https://www.cnbc.com/2023/02/02/stock-futures-fall-after-earnings-reports-from-apple-alphabet-disappoint-investors.html
5. “Market Rally Powers Higher On Tame Fed, Meta: Weekly Review” Investor's Business Daily, 3 Feb. 2023, https://www.investors.com/news/market-rally-powers-higher-on-tame-fed-meta-earnings-apple-google-amazon/
