Stocks End Mixed After Disappointing Jobs Report
5:03 pm Friday, January 07th, 2022
The jobs recovery may be losing steam. But the unemployment rate continued to fall, and workers are still bringing home bigger paychecks. Investors don’t seem sure what to think about those mixed messages.
Highlighting the key statistics from the employment report, nonfarm payrolls grew by just 199,000 (consensus 440,000), the unemployment rate declined to 3.9% (consensus 4.1%), and average hourly earnings rose by a higher-than-expected 0.6% (consensus 0.4%).
The report reaffirmed the tight labor market conditions necessary for the Fed to consider being more assertive in normalizing policy. First, the data suggested the economy is getting closer to maximum employment, even with the payrolls miss, and that the strong wage gains were part of the broader inflation story the Fed is keen on taming.
The latter observation is contributing to the continued rise in long-term interest rates. The 10-yr yield is currently up five basis points to 1.78% after hitting 1.80%, as previously mentioned. The 2-yr yield is trading flat at 0.88%, reflecting unchanged expectations for the path of the fed funds rate.
Interestingly, dip-buying efforts were evident earlier today after the S&P 500 dipped below its trusty 50-day moving average (4675). The benchmark index is barely holding onto the key technical level, so this could be an area worth watching for sentiment reasons.
For what it’s worth, the CBOE Volatility Index is up just 0.4% to 19.68 despite the continued selling pressure in the growth stocks. This suggests investors might be hoping that the selling could be nearing a short-term end, or that the value stocks could continue to provide offsetting support.
