On Thursday, stocks fell after better-than-expected job data showed a strong labor market.
The Dow Jones Industrial Average (DJI) fell 339.69 points, or 1.02%, to 32,930.08. The S&P 500 (.SPX) fell 44.87 points, or 1.16%, to 3,808.1. The Nasdaq Composite (.IXIC) shed 153.52 points, or 1.47%, to 10,305.24.
The stocks fell throughout the day after payroll processor ADP reported that jobs data was much stronger than anticipated by the economists. The report showed 235,000 jobs added by private employers in December, which is higher than the expected 153,000.
Nela Richardson, the ADP chief economist, said, “The labor market is strong but fragmented,”
Despite the big tech companies’ layoffs reporting 151,000 fewer jobs, there was job growth in small and medium-sized businesses last month. There is growth in jobs in the economy despite tech giants cutting jobs. Recently, Amazon announced job cuts of 18000. Economists also predict a looming recession.
Mike Loewengart of Morgan Stanley Global Investment Office said that the overall picture of the jobs market would be clearer on Friday. The private businesses beating economists’ expectations indicate that the labor market remains strong.
He also said that the big companies announcing job cuts are affected by the market’s pressure. But when hiring will slow significantly is yet to be seen.
Fed’s recent release of minutes of the mid-December meeting revealed an increase in rates. This was done in a bid to control inflation. But with the labor market still going strong, it could indicate higher inflation. Additionally, this shows that Fed will continue to hold the rates high. This could be a concern for the investors with the stock market taking a hit.