Editor
The U.S. economy added more jobs than market expectations, and Wall Street is recovering from the interest rate cuts.
IGN analysts say that the blowout January jobs report—payrolls surging, wages jumping, unemployment falling—means the Fed will be in no hurry to cut interest rates.
The meaning of these words was the same as what Leo Nelissen, part of the investing group iREIT on Alpha, says. Following the first monetary decision this year on Wednesday, “Today’s market reaction proves the market has a short-term memory. Yesterday, it sold off as it became somewhat obvious that the Fed is in no position to cut rates unless it believes that the battle against inflation has been won. Meaning that if it cuts, it will likely be “forced” cuts.”
The market probability of interest rates this month is decreasing each hour. With today’s job growth report, analysis shows a less than 40% probability of inter-rate cuts.
Unlike the worst trading session since September 2023, Thursday and Friday’s sessions were positive despite Wednesday’s low.
As of 8:00 a.m. ET, the Bureau of Statistics released the job growth report for the previous month, January. Last month, nonfarm payrolls in the largest economy increased by 353,000, surpassing economists’ expectations of 187,000. Even if compared with December’s data, the number was highly unexpected. December’s initial figure of 333,000 was revised upward from 216,000 due to an annual benchmarking process and seasonal adjustment factors.
Job gains in professional services, healthcare, and retail offset losses in mining, quarrying, and oil and gas extraction. while the unemployment rate remained at the same level as last month, fixed at 3.7%. Analysis at Citi commented on the fixed unemployment rates and said, “The January employment report pushes a March rate cut further off the table and makes May less likely.”
Based on today’s report and the strong quarterly earnings report, March interest rate cuts are far from happening. Still, according to CME Group’s Fed Watch Tool, there is a 56% chance of a 25 basis point rate cut in May, with March becoming less likely.
While on Wall Street, hours after the release of last month’s labor market report, the main index was slightly higher but slightly lower than the previous session. The S&P 500 benchmark was up by 0.73% to 4.942.22 bps. The tech-heavy Nasdaq jumped by 1.18%, boosted by high earnings from Meta and Amazon earnings reports.
Meta Meta Platforms (META) stock surged 15.2% to a record $454.81 per share after Q4 earnings exceeded expectations. The company announced its first-ever dividend, increased stock buyback by $50B, and provided positive Q1 revenue guidance. CEO Mark Zuckerberg highlighted growth in the community and business, emphasizing progress in AI and the metaverse. Amazon stocks rose by 7.1% to $170.6 thanks to its new shopping assistant called Rufus, which uses generative artificial intelligence to help search for products and maintain fourth-quarter sales. Still, Apple was below excitation due to the Chinese and U.S. chip-making tension. The company’s stock price fell by 2.9% to $181.45. The Dow Jones Industrial Average was slightly down by 0.11% to a total of 38.478.22 bps.
