Last week stocks fell for the second consecutive week as a round of fresh economic data stoked inflationary fears among investors. Stocks rallied broadly to start the week, but two economic reports on Tuesday – job openings and the prices-paid index among service companies – raised inflation concerns again. Higher Treasury yields also put pressure on stocks.
On Wednesday, investors reacted to news that most Federal Open Market Committee members agreed inflation risks had increased, per minutes from the Fed’s December meeting. To follow that up, on Friday, a warmer-than-expected December jobs report caused investors to question whether the Fed will adjust rates in 2025.
The economy added 256,000 jobs in December. That’s 100,000 more than economists expected. That’s the second-highest monthly job gain for 2024. Unemployment ticked down to 4.1 percent, which was also better than anticipated. Job growth and lower unemployment signals good news for the economy but bad news for the markets. How so? A stronger jobs market puts less pressure on the Fed to lower interest rates, especially with inflation top-of-mind among investors.
We’ll continue to watch the economic happenings. Like always, we’ll keep the bigger picture in perspective, separating what we can control from what we can’t. To that end, we’ll continue to focus primarily on your unique objectives as we consider strategies and share insights.
Have a great week, and stay warm!