It looked bright on Wall Street at the open of trading on Friday, before the mood reversed and major US indexes fell. The worst was the Nasdaq Tech Index, which ended the day down more than one and a half percent.
On Friday evening, the situation in Ukraine worsened, with an intense Russian attack on the Ukrainian nuclear power plant Zaporizhia – the largest in Europe. Heavy stock markets fell in European indices, with many ending the day more than four percent lower, and spread across US markets.
This is what it looked like on Wall Street at closing time on Friday night.
- The broad S&P 500 was down 0.79%.
- The Dow Jones Industrial Average was down 0.53%.
- The heavy-tech Nasdaq fell 1.66%.
Surprising numbers in the labor market
One hour before the New York Stock Exchange opens, the US Department of Labor’s Bureau of Labor releases the latest US employment data. 678,000 new jobs created in the US appear in February, excluding agriculture. The figures were expected in advance to show 423,000 new jobs. This means that the result was 255,000 higher, 60 percent more than expected.
January and December numbers were also revised upwards with a total of 92,000 new jobs. This means that the unemployment rate in the United States is now measured at 3.8 percent, which is somewhat lower than the expected rate of 3.9 percent.
With inflation rising, strong labor market numbers usually indicate an increased likelihood of interest rates being higher, but wage growth has been weaker than expected – 5.1 percent year over year versus the expected 5.8 percent.
The interest rate on the US government’s ten-year debt has fallen somewhat after the numbers became known, a possible signal that relatively weak wage growth will ease pressure to raise interest rates.
It is not uncommon to see a stronger-than-expected employment report in February, as Omicron infections fell sharply. But because of the tragic events in Russia and Ukraine, the global stock market is priced on the basis of uncertainty rather than known financial information, which traditionally drives stock prices, investment director Julian Kosky at New Age Alpha tells Bloomberg.
Fear of inflation
US employment numbers are often referred to as “the hottest numbers of the month,” because the numbers give an indication of how things are going in the world’s most important economy. These numbers are tracked by the US Federal Reserve (Fed) and financial markets around the world.
US President Joe Biden took to Twitter on Friday to celebrate the strong growth. “This is what it looks like when you build the United States better,” he wrote.
feed it It began limiting the massive subsidy purchases of securities that had stimulated the economy through the pandemic. Since the beginning of the pandemic, the Federal Reserve has been buying $120 billion a month in government bonds and other fixed-income securities.
The purpose is to rein in inflation, which has been mounting in several places in the wake of the pandemic, as an increasingly tight labor market has the potential to raise people’s wages and thus put more pressure on inflation.
Inflation threatens the classic New York one-dollar concept
In many places in New York, for many years I managed to get a slice of pizza for a dollar. Will inflation put an end to this? Scarlett Foe and Madison Mills of Bloomberg visit Champion Pizza, where the owner would rather close the shop than raise prices.
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It should be “flexible”
Meanwhile, Russia invaded Ukraine, which makes the calculations more complicated. This week, Central Bank Governor Jerome Powell confirmed that there will be a rate hike in March as expected, Even if the market does not believe On a possible double cancellation.
US Federal Reserve Chairman Jerome Powell. (Photo: Manuel Balce Ceneta/AP/NTB Scanpix)
The short-term effects of the invasion of Ukraine on the US economy, the ongoing war, sanctions, and future events remain largely unclear. Implementing the right monetary policy in such circumstances requires recognition that the economy is developing in unpredictable ways. Powell said we need to be flexible in how we respond to new information.
“Overall, we believe that this report will make the Fed more eager to tighten monetary policy, and if inflation rises more than expected next week, it is likely to double the rate hike, although Powell hinted at one increase this week,” the economist Knut A Magnussen at DNB Markets in an update after the employment figures were announced on Friday.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.
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