The November employment report The Federal Reserve still has a long way to go in its efforts to slow the economy, with data from the Labor Department hitting stocks hard today. In particular, the United States added a more-than-expected 263,000 jobs in November, while the unemployment rate held steady at 3.7% and average hourly earnings rose 5.1% year-over-year. Stocks initially sold off sharply on the news, but the end of the day wasn’t nearly as bad as the start.
“Investors are continuing to focus on inflation and fears of the Federal Reserve’s aggressive rate hikes and balance sheet reductions. recessionSo today’s news of a 0.6% increase in private sector hourly earnings, which easily beat the expected increase of 0.3%, is a painful setback at what was an impressive comeback at the end of the fourth quarter,” says Jose Torres, senior economist at Interactive Brokers. ” This is the third consecutive month of wage increases and comes two days after. Fed Chairman Jerome Powell The implication is that labor market weakness is necessary to curb decades of high inflation.”
Thus, major market indices lost 0.9% to 1.6% at the start of the session amid concerns that the central bank may need to keep interest rates high for longer to control inflation.
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However, the devil is in the details, says Daryl Patton, senior vice president and financial advisor at asset management firm Fort Pitt Capital. While the jobs report looks strong on the surface, Patton says it’s important to take a closer look. The bulk of job growth came from the services sector, he said, while manufacturing and manufacturing were the two sectors that saw the slowest pace of job gains.
“This supports our view of a shift in overall consumer spending from goods to services and is consistent with this. Yesterday’s ISM manufacturing report“says Patton.” As the pandemic unfolds in 2020, consumer spending has shifted away from services (travel, restaurants, etc.) in favor of real goods. As interest rates rise, we are seeing a reversal of spending on services.”
This thinking may have brought stocks to their session lows. Tech-heavy, albeit very low in the open Nasdaq Composite The day ended 0.2% down at 11,463 and wider S&P 500 Index It was off 0.1% at 4,071. blue chip Dow Jones Industrial Average Swing higher at the close, ending 0.1% at 34,429.
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Over the next several weeks, investors will begin to be bombarded with the outlook for 2023. Here at Kiplinger, we’ve already started our look-ahead lists, the most recent top initial public offerings (IPOs) investors should be looking for. Out for the new year. Although the IPO market slowed significantly in 2022 and will not pick up dramatically in 2023, some high-profile names make the list. Most popular upcoming IPOsIncluding Arm, one of the world’s largest semiconductor companies.