Medicare Agent News: Still Too Strong

Tuesday, October 11, 2022

Still Too Strong

By Connor Smith | Friday, October 7

Spooked. Stocks sank today after the latest jobs report had Wall Street worrying about the Federal Reserve's interest rate plans once again.

The Dow Jones Industrial Average shed 630 points to fall 2.1%. The S&P 500 fell 2.8% while the Nasdaq Composite dropped 3.8%. (The major indexes all still rose on the week, snapping a three-week losing streak for stocks.)

Friday's selloff followed the September jobs report from the Labor Department, which showed the U.S. economy added 263,000 jobs during the month. The consensus according to FactSet was 250,000. It's largely good news for the economy and bad news for stocks. Barron's Megan Cassella writes:

Overall, the report offers the clearest sign yet that the labor market is still showing remarkable strength even as it has begun to pull back from its peak, with both tighter monetary policy and higher labor costs beginning to weigh on demand for staff. The trend toward slower growth will come as a welcome sign for the Federal Reserve, which sees a cooling of the labor market as a necessary step in its quest to tame inflation. However, the continued resiliency across the board means there is nothing in the September report to suggest the bank will alter its aggressive path forward on tightening monetary policy.

Megan points out that growth in average hourly earnings was 0.3%, while the labor-force participation rate ticked down 0.1 percentage point.

Fed officials have been clear that as long as the labor market remains healthy, they will remain laser-focused on using their tools to rein in inflation without worrying about downside effects.

“One month of slowing job growth is likely not enough for the Fed to make any drastic changes to its policy, and we would need to see several months of a weakening employment picture in order for the Fed to act,” Russell Evans, chief investment officer with Avitas Wealth Management, said. “The Fed is very focused on inflation and that may mean that jobs are collateral damage.”

Louis Navellier, founder of Navellier & Associates, writes that the report dashed hopes from Wall Street that the numbers would clock in weaker than expected.

"Hopes for the Fed pivot anytime soon have evaporated," Navellier writes. "Don't fight the Fed is winning again."

Watch our weekly TV show on Fox Business Saturday or Sunday at 10 a.m. or 11:30 a.m. ET. This week, White House economist Jared Bernstein on jobs, rate hikes, and inflation.