O November employment report dealt a heavy blow to stocks today, with data from the Labor Department suggesting the Federal Reserve still has a long way to go in its efforts to slow the economy. Specifically, the US USA added a much higher-than-expected 263,000 jobs in November, while the unemployment rate remained steady at 3.7% and average hourly earnings grew 5.1% year-over-year. Stocks initially sold off heavily on the news, but the end of the day wasn’t as bad as the start.
“Investors are focused on persistent inflation and fear that aggressive rate hikes and the shrinking of the Federal Reserve’s balance sheet will lead to a recessionso today’s news that private sector hourly earnings grew 0.6%, easily beating the expected 0.3% increase, is a stinging interception during what was an impressive late-fourth-quarter rally “says José Torres, senior economist at Interactive Brokers. “It’s the third consecutive month of wage acceleration and it comes just two days after Fed Chairman Jerome Powell implied that labor market weakness is necessary to tame decades-high inflation.”
As a result, the main market indexes suffered losses ranging from 0.9% to 1.6% at the start of the session on concerns that the central bank will have to keep interest rates higher for longer to control the inflation
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However, the devil is in the details, says Daryl Patten, senior vice president and financial advisor at asset management firm Fort Pitt Capital. While the jobs report looks strong on the surface, Patten says it’s important to take a closer look. The vast majority of employment growth, he points out, came from the services sector, while construction and manufacturing were two areas that experienced the lowest pace of employment growth.
“This supports our thoughts about a shift in overall consumer spending from goods to services and is in line with the yesterday’s ISM manufacturing report” says Patten. “As the pandemic raged in 2020, consumer spending shifted away from services (think travel, restaurants, etc.) in favor of real goods. As interest rates rise, we’re seeing a reversal of that spending on services.”
This thought could be what sent the stock off its session lows. Despite being much lower in the open, heavy technology Nasdaq Composite closed the day down 0.2% at 11,463 and wider S&P 500 index it was down 0.1% at 4,071. The blue-chip Dow Jones Industrial Average it was flat at the close, ending up 0.1% at 34,429.
The most popular upcoming IPOs to watch
Over the next few weeks, investors will begin to be bombarded with the outlook for 2023. Here at Kiplinger, we’ve already started our forecast lists, and more recently delving into the top initial public offerings (IPOs) that investors should be on the lookout for. off for the new year. The IPO market slowed considerably in 2022, and while it’s unlikely to rebound dramatically in 2023, there are still some high-profile names included in the list of the most popular upcoming IPOsincluding Arm, one of the largest semiconductor companies in the world.