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The numbers: The U.S. created a stronger-than-expected 253,000 new jobs in April and wages rose sharply, indicating there’s still lot of demand for labor even as the economy slows.
The increase surpassed the 180,000 forecast of economists polled by The Wall Street Journal.
The unemployment rate, what’s more, fell a tick to 3.4% from 3.5%,…
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The numbers: Private-sector employment jumped by 296,000 in April and hit a nine-month high, payroll processor ADP said Wednesday, in a sign the U.S. labor market is still going strong.
The increase in hiring was much larger than expected. Economists polled by The Wall Street Journal had forecast a gain of 133,000 private sector jobs.
The…
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The numbers: The number of Americans who applied for unemployment benefits last week rose by 5,000 to 245,000 and pointed to a small erosion in a robust U.S. labor market.
New jobless claims increased from a revised 240,000 in the prior week, the Labor Department said Thursday. The figures are seasonally adjusted.
The number of people applying for unemployment benefits is one of the best barometers of whether the economy is getting better or worse.
New jobless claims are still very low, but they have risen from less than 200,000 in January in a sign the labor market has cooled slightly as higher interest rates dampen U.S. growth.
Key details: Thirty-five of the 53 U.S. states and territories that report jobless claims showed a decrease last week. Eighteen posted an increase.
Most of the increase in new jobless claims were in New York, where new filings typically rise during school breaks and fall immediately afterward.
Other states reported little change.
The number of people collecting unemployment benefits in the U.S., meanwhile, jumped by 61,000 to 1.87 million in the week ended April 8. That’s the highest level since November 2021.
The gradual increase in these so-called continuing claims suggests it’s taking longer for people who lose their jobs to find new ones.
Big picture: Wall Street is watching jobless benefits closely because it’s one of the first indicators to start blinking red when the U.S. is headed toward recession.
New jobless claims have crept higher this year after touching a 54-year low, pointing to some cooling in a hot labor market. But the labor market is still quite strong
The Federal Reserve wants the labor market to cool even further to temper a sharp increase in wages and help the bank combat high inflation. A series of interest-rate increases by the central bank have slowed the economy and eventually should curb the appetite for workers.
Looking ahead: “With talk of deteriorating economic conditions and in the wake of the recent bank failures, businesses may turn more cautious in their hiring practices,” said senior economic advisor Stuart Hoffman of PNC Financial Services.
“Our view remains that layoffs will rise less dramatically than normally might occur as companies do all they can to avoid shedding workers who have been incredibly difficult to recruit and retain,” said chief economist Joshua Shapiro of MFR Inc.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open lower in Thursday trades.
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Have you got itchy feet?
The U.S. economy added 236,000 jobs in March, just shy of the 238,000 forecast by economists polled by the Wall Street Journal. The unemployment rate declined to 3.5% in March from 3.6% in February.
The latest data was calculated before the collapse of Silicon Valley Bank and Signature Bank last month, an event that…
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U.S. stock-index futures turned higher in a holiday-shortened session after a solid March jobs report, though investors won’t fully digest the data until next week with cash trading in equities closed due to the Good Friday holiday.
Trading in stock-index futures closed at 9:15 a.m. Eastern. Stock-index futures resume trading at their regular time, 6 p.m., on Sunday, as U.S. markets return to normal trading hours Monday.
With…
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The numbers: The U.S. added a robust 236,000 new jobs in March, defying the Federal Reserve’s hopes for a big slowdown in hiring as the central bank struggles to tame inflation. The consensus economist forecast called for a nonfarm-payrolls expansion of 238,000.
The solid increase in employment last month followed a revised 326,000 gain in February and a gain of 472,000 in January.
While the increase in hiring was the smallest monthly rise in more than two years, the number of jobs created last month was much greater than is typical.
The unemployment rate, meanwhile, slipped to 3.5% from 3.6% as more people searched for and found work. That’s another sign of labor-market vigor.
There was some good news in the report for the Fed, though.
Wage growth continued to moderate closer to level the Fed would prefer. Hourly wages increased a mild 0.3% last month, the government said Friday.
The increase in pay over the past year also slowed again to a nearly two-year low of 4.2% from 4.6% in February.
What’s more, the share of people working or looking for work rose a tick to 62.6%. That’s the highest labor-force participation rate since February 2020, the last month before the pandemic’s onset.
When more people look for work, companies don’t have to compete as hard for workers via higher pay.
Emerging evidence of slack in a muscular U.S. labor market could encourage the Fed to take a breather after a rapid series of interest-rate increases.
Still, the U.S. has added a whopping 1 million–plus new jobs in the first three months of the year. The labor market is not cooling off as much as the Fed would like.
“ The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s. ”
Stock-index futures rallied after the report, though the stock market itself is officially closed due to the Good Friday holiday.
See: Why Good Friday complicates how stock-market traders will digest March jobs report
Key details: About one-third of the new jobs created last month — 72,000 — were at service-sector companies such as bars and restaurants whose employment still has not returned to prepandemic levels.
Americans are going out to eat a lot and spending relatively more on services than on goods.
Government employment increased by 47,000. Hiring also rose at professional businesses and in healthcare. Retailers cut 15,000 jobs.
Employment fell slightly in manufacturing and construction, or goods-producing industries, which are under more pressure from rising interest rates.
The strong labor market has benefited all groups, but especially Black Americans. The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s.
Big picture: The ongoing tightness in the labor market could inflame inflation and even push the Fed to raise interest rates more than currently forecast to try to get prices under control.
Higher borrowing costs reduce inflation by slowing the economy, but most Fed rate-hike cycles since World War II have been followed by recession.
On the flip side, the U.S. economy is starting to show more signs of deterioration due to the series of rapid Fed interest-rate increases since last year.
Manufacturers have cut production and are arguably already in recession and the much larger service side of the economy is under more stress lately.
If these trends continue the economy — and inflation — are bound to slow.
The U.S. is still growing for now, however, and the labor market remains an oasis of strength.
Low unemployment and rising wages have allowed Americans to keep spending. And so far they’ve keep the economy out of a widely predicted recession.
Looking ahead: “The U.S. labor market is losing some momentum, but remains far too vibrant for the Fed to pause [its rate-hike campaign] in May,” said senior economist Sal Guatieri at BMO Capital Markets
“Although job growth is gradually slowing, it remains too strong for the Federal Reserve,” said Sal Guatieri of PNC Financial Services.
See: Traders see little chance interest rates will end up where Fed thinks in 2023
Market reaction: Futures contracts on the Dow Jones Industrial Average
YM00,
rose 64 points, or 0.2%, to 33,723. S&P 500 futures
ES00,
gained 9.75 points, or 0.2%, to 4,141.75. Stock trading resumes again on Monday.
The yield on the 10-year Treasury
TMUBMUSD10Y,
jumped to 3.36%.
MarketWatch personal finance: U.S. economy added 236,000 jobs in March. Is this your last chance to jump ship?
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U.S. stock-index futures turned higher in a holiday-shortened session after a solid March jobs report, though investors won’t fully digest the data until next week with cash trading in equities closed due to the Good Friday holiday.
Trading in stock-index futures closed at 9:15 a.m. Eastern. Stock-index futures resume trading at their regular time, 6 p.m., on Sunday, as U.S. markets return to normal trading hours Monday.
With the exception of the Dow industrials, U.S. stocks finished the holiday-shortened week lower on Thursday after three consecutive weekly gains for the S&P 500 and the tech-heavy Nasdaq. The Dow
DJIA,
rose 0.6% for the week, while the S&P 500
SPX,
shed 0.1% and the Nasdaq
COMP,
slumped 1.1%, after scoring its best quarter since 2020.
The U.S. added 236,000 new jobs in March, defying the Federal Reserve’s hopes for a big slowdown in hiring and possibly making it harder for the central bank to tame inflation. Economists polled by The Wall Street Journal had forecast 238,000 new jobs.
The unemployment rate, meanwhile, slipped to 3.5% from 3.6%. Wages rose 0.3% last month.
“This month’s report indicates that interest rate hikes have yet to impact tight unemployment conditions,” said Steve Rick, chief economist at CUNA Mutual Group, in emailed comments.
Treasury yields popped higher and the dollar rose, though traders noted conditions were thin due to the holiday. Fed-funds futures showed traders pricing in a nearly 70% chance the Federal Reserve will lift interest rates by a quarter-point in May and a roughly 30% chance policy makers will leave rates unchanged. Traders had seen a roughly 50-50 split on Thursday.
“Today’s jobs report is consistent with a slow-moving recession unfolding in the U.S. and one that does not point to immediate resolution of inflation concerns,” said Jason Pride, chief investment officer of private wealth at Glenmede, in a note. “As such, the odds of another quarter-point rate hike in May should go higher as the data does not appear to justify a Fed pause.”
That said, policy makers and investors will see a raft of data before the next Fed meeting, including next week’s consumer-price index reading, Pride noted.
Good Friday is a market holiday but not a U.S. federal holiday. That means the U.S. Labor Department released its March jobs report, as usual. Bond traders will see a half day of trading, with Sifma recommending a noon ET close to allow a reaction to the data.
Read: Why Good Friday complicates how stock-market traders will digest March jobs report
Investors saw a stream of jobs-related data over the course of the past week. Data on Tuesday showed the number of U.S. job openings dropped below 10 million to a 21-month low, indicating a hot jobs market may be starting to lose some sizzle.
ADP on Wednesday said the private sector added 145,000 jobs in March, well below the 210,000 expected by economists. Weekly jobless claims data on Thursday morning showed first-time applications for benefits last week came in higher than expected.
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The numbers: The U.S. added a robust 236,000 new jobs in March, defying the Federal Reserve’s hopes for a big slowdown in hiring as the central bank struggles to tame inflation. The consensus economist forecast called for a nonfarm-payrolls expansion of 238,000.
The solid increase in employment last month followed a revised 326,000 gain in February and a gain of 472,000 in January.
While the increase in hiring was the smallest monthly rise in more than two years, the number of jobs created last month was much greater than is typical.
The unemployment rate, meanwhile, slipped to 3.5% from 3.6% as more people searched for and found work. That’s another sign of labor-market vigor.
There was some good news in the report for the Fed, though.
Wage growth continued to moderate closer to level the Fed would prefer. Hourly wages increased a mild 0.3% last month, the government said Friday.
The increase in pay over the past year also slowed again to a nearly two-year low of 4.2% from 4.6% in February.
What’s more, the share of people working or looking for work rose a tick to 62.6%. That’s the highest labor-force participation rate since February 2020, the last month before the pandemic’s onset.
When more people look for work, companies don’t have to compete as hard for workers via higher pay.
Emerging evidence of slack in a muscular U.S. labor market could encourage the Fed to take a breather after a rapid series of interest-rate increases.
Still, the U.S. has added a whopping 1 million–plus new jobs in the first three months of the year. The labor market is not cooling off as much as the Fed would like.
“ The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s. ”
Stock-index futures rallied after the report, though the stock market itself is officially closed due to the Good Friday holiday.
See: Why Good Friday complicates how stock-market traders will digest March jobs report
Key details: About one-third of the new jobs created last month — 72,000 — were at service-sector companies such as bars and restaurants whose employment still has not returned to prepandemic levels.
Americans are going out to eat a lot and spending relatively more on services than on goods.
Government employment increased by 47,000. Hiring also rose at professional businesses and in healthcare. Retailers cut 15,000 jobs.
Employment fell slightly in manufacturing and construction, or goods-producing industries, which are under more pressure from rising interest rates.
The strong labor market has benefited all groups, but especially Black Americans. The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s.
Big picture: The ongoing tightness in the labor market could inflame inflation and even push the Fed to raise interest rates more than currently forecast to try to get prices under control.
Higher borrowing costs reduce inflation by slowing the economy, but most Fed rate-hike cycles since World War II have been followed by recession.
On the flip side, the U.S. economy is starting to show more signs of deterioration due to the series of rapid Fed interest-rate increases since last year.
Manufacturers have cut production and are arguably already in recession and the much larger service side of the economy is under more stress lately.
If these trends continue the economy — and inflation — are bound to slow.
The U.S. is still growing for now, however, and the labor market remains an oasis of strength.
Low unemployment and rising wages have allowed Americans to keep spending. And so far they’ve keep the economy out of a widely predicted recession.
Looking ahead: “The U.S. labor market is losing some momentum, but remains far too vibrant for the Fed to pause [its rate-hike campaign] in May,” said senior economist Sal Guatieri at BMO Capital Markets
“Although job growth is gradually slowing, it remains too strong for the Federal Reserve,” said Sal Guatieri of PNC Financial Services.
See: Traders see little chance interest rates will end up where Fed thinks in 2023
Market reaction: Futures contracts on the Dow Jones Industrial Average
YM00,
rose 64 points, or 0.2%, to 33,723. S&P 500 futures
ES00,
gained 9.75 points, or 0.2%, to 4,141.75. Stock trading resumes again on Monday.
The yield on the 10-year Treasury
TMUBMUSD10Y,
jumped to 3.36%.
MarketWatch personal finance: U.S. economy added 236,000 jobs in March. Is this your last chance to jump ship?
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The numbers: The U.S. added a robust 236,000 new jobs in March, defying the Federal Reserve’s hopes for a big slowdown in hiring as the central bank struggles to tame inflation. The consensus economist forecast called for a nonfarm-payrolls expansion of 238,000.
The solid increase in employment last month followed a revised 326,000 gain in February and a gain of 472,000 in January.
While the increase in hiring was the smallest monthly rise in more than two years, the number of jobs created last month was much greater than is typical.
The unemployment rate, meanwhile, slipped to 3.5% from 3.6% as more people searched for and found work. That’s another sign of labor-market vigor.
There was some good news in the report for the Fed, though.
Wage growth continued to moderate closer to level the Fed would prefer. Hourly wages increased a mild 0.3% last month, the government said Friday.
The increase in pay over the past year also slowed again to a nearly two-year low of 4.2% from 4.6% in February.
What’s more, the share of people working or looking for work rose a tick to 62.6%. That’s the highest labor-force participation rate since February 2020, the last month before the pandemic’s onset.
When more people look for work, companies don’t have to compete as hard for workers via higher pay.
Emerging evidence of slack in a muscular U.S. labor market could encourage the Fed to take a breather after a rapid series of interest-rate increases.
Still, the U.S. has added a whopping 1 million–plus new jobs in the first three months of the year. The labor market is not cooling off as much as the Fed would like.
“ The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s. ”
Stock-index futures rallied after the report, though the stock market itself is officially closed due to the Good Friday holiday.
See: Why Good Friday complicates how stock-market traders will digest March jobs report
Key details: About one-third of the new jobs created last month — 72,000 — were at service-sector companies such as bars and restaurants whose employment still has not returned to prepandemic levels.
Americans are going out to eat a lot and spending relatively more on services than on goods.
Government employment increased by 47,000. Hiring also rose at professional businesses and in healthcare. Retailers cut 15,000 jobs.
Employment fell slightly in manufacturing and construction, or goods-producing industries, which are under more pressure from rising interest rates.
The strong labor market has benefited all groups, but especially Black Americans. The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s.
Big picture: The ongoing tightness in the labor market could inflame inflation and even push the Fed to raise interest rates more than currently forecast to try to get prices under control.
Higher borrowing costs reduce inflation by slowing the economy, but most Fed rate-hike cycles since World War II have been followed by recession.
On the flip side, the U.S. economy is starting to show more signs of deterioration due to the series of rapid Fed interest-rate increases since last year.
Manufacturers have cut production and are arguably already in recession and the much larger service side of the economy is under more stress lately.
If these trends continue the economy — and inflation — are bound to slow.
The U.S. is still growing for now, however, and the labor market remains an oasis of strength.
Low unemployment and rising wages have allowed Americans to keep spending. And so far they’ve keep the economy out of a widely predicted recession.
Looking ahead: “The U.S. labor market is losing some momentum, but remains far too vibrant for the Fed to pause [its rate-hike campaign] in May,” said senior economist Sal Guatieri at BMO Capital Markets
“Although job growth is gradually slowing, it remains too strong for the Federal Reserve,” said Sal Guatieri of PNC Financial Services.
See: Traders see little chance interest rates will end up where Fed thinks in 2023
Market reaction: Futures contracts on the Dow Jones Industrial Average
YM00,
rose 64 points, or 0.2%, to 33,723. S&P 500 futures
ES00,
gained 9.75 points, or 0.2%, to 4,141.75. Stock trading resumes again on Monday.
The yield on the 10-year Treasury
TMUBMUSD10Y,
jumped to 3.36%.
MarketWatch personal finance: U.S. economy added 236,000 jobs in March. Is this your last chance to jump ship?
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Normally a big increase in new U.S. jobs is cause for celebration. Not right now.
The Federal Reserve sees a tight labor market as a big obstacle in getting high inflation under control and wants hiring to slow as soon as possible, but it might not get its wish in March.
…
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The numbers: The number of Americans applying for jobless benefits has topped 200,000 for nine weeks in a row and looks worse than previously reported, based on a change in how the government adjusts for seasonal swings in employment.
The newly revised data suggest the labor market has softened more than it had appeared.
In the seven days…
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The numbers: The number of Americans who applied for unemployment benefits last week slipped to a three-week low of 191,000, signaling little erosion in a strong U.S. labor market even as the economy faced fresh strains.
New U.S. applications for benefits fell by 1,000 from 192,000 in the prior week, the government said Thursday. .
The number of people applying for jobless benefits is one of the best barometers of whether the economy is getting better or worse. New unemployment applications remain near historically low levels.
Economists polled by The Wall Street Journal had forecast new claims to total 198,000 in the seven days ended March 18. The numbers are seasonally adjusted.
Key details: Twenty-eight of the 53 U.S. states and territories that report jobless claims showed a decrease last week. Twenty-five posted an increase.
Most of the changes were small except in Indiana.
One potential red flag: The number of raw or actual claims — before seasonal adjustments — was much higher last week compared to the same week a year earlier. But so far there’s little sign of a trend.
“Even the tens of thousands of recent [high-tech] layoffs have almost completely been absorbed by a powerful labor market that has plenty of expansion left in it,” contended Robert Frick, chief corporate economist at Navy Federal Credit Union.
The number of people collecting unemployment benefits across the country, meanwhile, rose by 14,000 to 1.69 million in the week ended March 11. That number is reported with a one-week lag.
These continuing claims are still low, but a gradual increase since last year suggests it’s taking longer for people who lose their jobs to find new ones.
Big picture: Jobless benefit claims are one of the first indicators to emit danger signals when the U.S. is headed toward recession. It’s still not flashing a red-light, or even a yellow one, as the economy comes under more duress.
The Federal Reserve, for instance, just raised interest rates to a nearly 16-year high. And the failure of Silicon Valley Bank has put more stress on the U.S. financial system.
Both of these actions could constrain the economy in the months ahead, curb hiring and potentially boost a low unemployment rate. If so, watch the trend in new jobless claims.
Looking ahead: “Most companies are either still hiring or are holding onto their employees and seeking other ways to cut costs,” said chief economist Joshua Shapiro of MFR Inc.
“This is consistent with our view that layoffs will rise less dramatically than normally might occur as companies do all they can to avoid shedding workers who have been incredibly difficult to recruit and retain.”
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open higher in Thursday trades. Stocks have been under pressure since the failure of SVB earlier this month.
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U.S. stocks ended sharply lower Friday as investors parsed mixed signals from the February jobs report amid ongoing concerns about contagion in the banking sector from the troubles at Silicon Valley Bank.
For the week, the Dow sank 4.4%, S&P 500 dropped 4.5% and the Nasdaq shed 4.7%, according to Dow Jones Market Data. The Dow booked its worst week since June, the S&P 500 saw its biggest weekly percentage decline since September, and the Nasdaq had its biggest percentage slide since November.
U.S. stocks slumped amid investor concerns about the banking sector after the closure of Silicon Valley Bank by the Federal Deposit Insurance Corp and in the wake of the monthly employment report released Friday.
In a sign of investor anxiety, the CBOE Volatility Index
VIX,
was up Friday afternoon at almost 25, after jumping Thursday, according to FactSet data, last check.
“Bears came out of hibernation this week after waking up to a warning shot from the banking space,” said Adam Turnquist, chief technical strategist for LPL Financial, in emailed comments Friday, pointing to the collapse of Silicon Valley Bank.
Silicon Valley Bank was closed Friday by the California Department of Financial Protection and Innovation. The Federal Deposit Insurance Corp. was appointed receiver, with the bank becoming the first FDIC-backed institution to fail this year.
Read: Bank ETFs fall amid concerns over SVB and ‘crack’ in financial system after rate hikes
The SPDR S&P Regional Banking ETF
KRE,
was down more than 4% Friday afternoon, FactSet data show, while shares of Bank of America Corp.
BAC,
closed 0.9% lower, Citigroup Inc.
C,
slid 0.5% and JPMorgan Chase & Co.
JPM,
rose 2.5%.
Worries over the banking sector are “probably overshadowing” the positive aspects of the employment report, said Karim El Nokali, investment strategist at Schroders, in a phone interview Friday.
The U.S. employment report for February showed the labor market continued to grow at a robust pace last month, with the U.S. economy adding 311,000 jobs, more than the 225,000 that economists polled by the Wall Street Journal had expected.
But “if you dig a little deeper” into the report, average hourly earnings came in “a little lighter than expected” while labor-force participation ticked up, which are positive developments from an inflation standpoint, said El Nokali.
Average hourly wages grew by 0.2%, a slower rate than the 0.3% rate economists had expected. It was also less than the 0.3% increase in January. The unemployment rate ticked higher to 3.6%, helped by an increase in the labor-force participation rate.
“On the margin,” said El Nokali, the employment report was “positive for the equity market.” He said it would “probably argue more” for the Federal Reserve to raise its benchmark rate by 25 basis points at its policy meeting later this month, as opposed to a 50-basis-point hike that investors had been fearing leading up to the employment data.
See: Jobs report shows strong 311,000 gain in February, puts pressure on Fed for bigger rate hike
Fed Chair Jerome Powell said earlier this week that the “totality” of jobs and inflation data would determine whether the central bank would go back to raising its policy interest rate by another 50 basis points at its meeting later in March.
After climbing earlier in the week, odds of a 50-basis-point rate hike by the Fed have moderated over the past 24 hours. Traders now see a 62% chance of the central bank raising its benchmark rate by 25 basis points, according to the CME FedWatch Tool.
Meanwhile, Treasury yields sank Friday.
The yield on the 2-year Treasury note
TMUBMUSD02Y,
dropped 31.4 basis points to 4.586%, while the 10-year Treasury yields fell 22.8 basis points to 3.694%, according to Dow Jones Market Data. The Treasury yield curve remains massively inverted, which has contributed to banks’ woes.
—Steve Goldstein contributed to this report.
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The numbers: The U.S. created a robust 311,000 new jobs in February, raising the odds of another sharp hike in interest rates by the Federal Reserve later this month.
Economists polled by The Wall Street Journal had forecast 225,000 new jobs.
The increase in employment last month followed a revised 504,000 gain (initially 517,000) in January, the government said Friday.
The large back-to-back increases could force the Fed to raise interest rates higher than it had planned to slow the economy and loosen up the tightest labor market in decades. The central bank meets March 21-22 to plot its next move.
Scott Olson/Getty Images
Yet there were a few glimmers of hope for the Fed.
The unemployment rate rose a few ticks to 3.6%. Hourly wages rose just 0.2% to mark the smallest increase in a year. And the share of able-bodied people in the labor force climbed to a three-year high.
All of these are pressure valves on the labor market and the broader economy from high inflation.
Investors appeared to put more weight on those factors than another big increase in employment. Stocks rose and bond yields fell.
Big picture: An expanding U.S. economy has shown lots of resilience in the face of rising interest rates, but analysts doubt the good times can last. Higher borrowing costs typically slow the economy by depressing consumer spending and business investment.
Just look at the housing market, where soaring mortgage rates have crushed sales and new construction. The same could happen to the rest of the economy if the Fed has to jack up rates more than Wall Street expects.
Already, a robust U.S. labor market is showing signs of fraying. Job postings have declined, lots of large companies have announced layoffs and workers who lose a job are taking longer to find a new one.
It just might not be enough for the Fed.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
trimmed premarket losses in Friday trades. The yield on the 10-year Treasury fell to 3.78%.
Investors hope some signs of cooling in the labor market will encourage the Fed to keep raising interest rates in smaller increments.
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U.S. stocks extended losses in the final hour of trade on Thursday, while awaiting Friday’s February employment data that could help decide how large an interest rate hike the Federal Reserve will impose at its next meeting in two weeks.
Financial sector stocks were particularly hard hit along with cryptocurrencies after Silvergate Capital Corp., collapsed overnight amid growing scrutiny in Washington. Other financial stocks fell, dragged down by SVB Financial Group, which fell by a record amount.
Both the S&P 500 and Nasdaq finished higher on Wednesday, with only the Dow finishing in the red, while all three indexes remained on track for weekly losses. A weekly drop for the S&P 500 would mark its fourth such pullback in five weeks.
U.S. stocks trimmed earlier gains and extended losses on Thursday afternoon after trading modestly higher after the open when the latest weekly jobless claims data showed an unexpectedly large uptick in the number of Americans filing for unemployment benefits.
The number of Americans who applied for unemployment benefits in early March jumped to a 10-week high of 211,000, the highest level since Christmas. That’s higher than the 195,000 new applicants that economists polled by the Wall Street Journal had anticipated.
Economists said the data suggest that the labor market might be starting to slow, which is seen as a necessary prerequisite for driving inflation back to the Fed’s 2% target.
“The labor market might just be on the cusp of an inflection point,” said Peter Boockvar, chief investment officer of Bleakley Financial Group, in emailed commentary.
Investors are now looking ahead to Friday’s closely watched February jobs report from the Department of Labor. Economists polled by the Wall Street Journal expect 225,000 jobs were created last month after 517,000 new jobs were created in January, a number that was much higher than economists had anticipated.
“If we do get the expected 200,000, or really anything between say 180,000 and 240,000, this would be a return to the prior trend and would signal that last month was indeed a one-off,” said Brad McMillan, chief investment officer of Commonwealth Financial Network, in emailed comments.
“That would be perceived as a positive by the Fed and markets, suggesting that inflation may start moderating again but is still high enough to allow for continued economic growth.”
The Russell 2000
RUT,
the small-cap index, is on pace to close below its 50-day moving average for the first time since January 9, 2023, according to Dow Jones Market Data.
Regional bank stocks underperformed on Thursday. Shares of Silicon Valley Bank parent company SVB Financial Group
SIVB,
plummeted more than 61% after the company disclosed large losses from securities sales and a stock offering meant to provide a boost to its balance sheet. SVB is on pace to book the biggest one-day selloff since the dotcom boom, while its trading was halted for volatility multiple times, according to Dow Jones Market Data.
Signature Bank
SBNY,
shares dropped 11.2%undefined
The KBW Bank Index
BKX,
of 24 leading banks slumped 7.1%, on pace for its worst day since June 26, 2020, according to Dow Jones Market Data. SPDR S&P Bank ETF
KBE,
was down 6.5%.
Treasury yields fell with the yield on the 2-year note BX:TMUBMUSD02Yslipped to 4.885% from 5.064% on Wednesday.
Stocks suffered earlier in the week after Powell said during testimony on Capitol Hill that rates would likely need to rise even further than market participants had expected. However, the main indexes saw some relief after the Fed chief clarified that policymakers hadn’t yet decided on the size of the next rate hike.
Investors have already digested several reports on the labor market this week, including a report on the number of job openings, which showed that the number of Americans quitting their jobs had fallen below 4 million in January for the first time in 19 months.
“The big picture is that the labor market is easing, but it’s still tighter than it was before the pandemic,” said Sonu Varghese, a global macro strategist at Carson Group.
— Jamie Chisholm contributed to this article
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The numbers: The number of Americans who applied for unemployment benefits in early March jumped to a 10-week high of 211,000. Yet most of the increase was concentrated in New York and might not signal a broader cooling-off trend in the U.S. labor market.
New U.S. applications for benefits rose 21,000 from 190,000 in the prior week, the government said Thursday. The numbers are seasonally adjusted.
It’s the first time in eight weeks claims have topped the 200,000 mark.
An unusually big increase took place in New York. Raw or actual unemployment applications in the state jumped to 30,241 from 13,878 in the prior week.
Chief economist Stephen Stanley of Santander U.S. Capital Markets said school workers in New York City are allowed by contract to apply for benefits during winter and spring breaks.
Asked about the upsurge, a government spokesperson said by email that “the New York State Department of Labor cannot speculate on the increase.”
California also posted a sizable pickup, perhaps a sign that the recent spate of major corporate layoffs are starting to bite. A number of large tech firms have announced job cuts since last fall.
The number of people applying for jobless benefits is one of the best barometers of whether the economy is getting better or worse. New unemployment applications remain near historically low levels, however.
Economists polled by The Wall Street Journal had forecast new claims to total 195,000 in the seven days ending March 3.
Key details: Thirty-seven of the 53 U.S. states and territories that report jobless claims showed an increase last week. Seventeen posted a decline.
Most states aside from New York and California reported little change.
The number of people collecting unemployment benefits across the country, meanwhile, rose by 69,000 to a two-month high of 1.72 million in the week ending Feb. 25. That number is reported with a one-week lag.
These continuing claims are still low, but a gradual increase since last spring suggests it’s taking longer for people who lose their jobs to find new ones.
Big picture: Jobless claims are one of the first indicators to emit danger signals when the U.S. is headed toward recession.
So far, jobless claims remain remarkably low and the economy is still adding plenty of jobs. Economists estimate that the U.S. gained 225,000 new jobs in February.
Economists expect hiring to slow and layoffs to increase later in the year, however, as rising interest rates restrain the economy and reduce demand for workers. A number of large companies, especially in tech, media and finance, have already announced job cuts.
Looking ahead: “Absent [New York], the count would likely have been below 200,000 yet again,” Stanley of Santander said.
“Broadly, initial jobless claims have remained remarkably low despite the flurry of layoff announcements in recent months, underscoring that the labor market retains considerable momentum.”
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
rose in Thursday trades.
Wall Street is hoping for signs of cooling in the labor market, which would discourage the Federal Reserve from raising interest rates more aggressively. The Fed is raising rates to snuff out inflation and reduce upward pressure on wages.
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The dash for trash has hit a speed bump. Stocks faltered again this past week as the early-year rally, led by rebounds in 2022’s speculative-grade losers, ran into resistance from higher expected interest rates from the Federal Reserve in the wake of persistent inflation readings and few signs that growth is faltering.
Economists at an array of major Wall Street banks, including Goldman Sachs, Bank of America, and Citigroup, lifted their forecasts of the eventual peak in the central bank’s target range for the overnight federal-funds rate, to 5.25% to 5.50%, effectively bringing them in line with the fed-funds futures market. Deutsche Bank now is expecting a 5.6% single-point peak, up a half-percentage-point from its previous estimate, and among the highest forecasts.
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By Xavier Fontdegloria
The eurozone jobless rate was stable in November at its record low, highlighting resilience in the labor market despite slowing economic growth.
The eurozone unemployment rate stood at 6.5% in November, unchanged from October, data from the European Union’s statistics agency Eurostat showed Monday. This is the lowest level of the historical series, which dates back to 1998.
The reading is in line with economists’ forecasts in a poll by The Wall Street Journal.
The number of unemployed people was 10.97 million in November, also broadly unchanged from October, the statistics agency said.
Eurozone unemployment is expected to increase slightly in the first half of 2023 as the economy falls into recession, economists say. The jobless rate is expected to increase to 7.0% in mid-2023, according to a consensus provided by FactSet.
Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
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U.S. stocks advanced Friday, with the Dow rising 500 points, as monthly Labor Department data showed the pace of job creation cooled in December while wage gains slowed, fueling hopes that the Federal Reserve’s interest rate hikes are starting to have the desired effect.
After several sessions of choppy trade stocks finished lower on Thursday. However, thanks to Friday’s strong rebound, the S&P 500 is on track to finish the week in the green after four consecutive weekly declines.
Stock-market bulls cheered Friday’s jobs report, which showed that the pace of job creation and wage growth cooled last month, contradicting labor-market data released earlier in the week.
The December nonfarm payrolls report showed 223,000 jobs were created in December, above expectations for 200,000 new jobs, though the pace of job creation slowed from 256,000 during November. Wages grew by just 0.3% in December, down from 0.4% a month earlier.
See: U.S. adds 223,000 jobs in December and jobless rate matches 55-year low of 3.5%
While stocks advanced in the wake of the data, it seems the labor market has continued to confound expectations for an imminent recession, market analysts said. While the pace of wage growth has slowed slightly, workers continued to command higher pay, even if wages have lagged headline inflation.
“This is not going to push the Fed off its agenda one iota,” said Brad Conger, deputy chief investment officer at Hirtle, Callaghan & Co., in commentary about Friday’s data.
Numerous Fed officials have made clear that they want to see unemployment climb in order to help suppress inflation and engineer a return to the Fed’s 2% target. Senior Fed officials expect unemployment to rise by nearly a percentage point in 2023, according to projections released in December.
“The release was a win-win from the Fed’s perspective, as it signaled that wage inflation is moderating while job growth remains steady,” said Peter Essele, Head of Portfolio Management, Commonwealth Financial Network. “Coupled with the fact that headline inflation continues to move in the right direction, there’s a growing chance the Fed may be able to navigate a soft landing in the economy. If it meets its target, 2023 could be one of the best years for markets given the amount of negative investor sentiment currently weighing on prices.”
The S&P 500 index is down more than 19% from its 52-week high after the Fed raised interest rates by 4.25 percentage points in 2022 in an attempt to crush inflation that hit a four-decade high of 9.1% in June, according to the consumer-price index.
Jobs data released earlier in the week painted a picture of a labor market that had remained robust despite the Fed’s best efforts, and it’s not clear whether Friday’s data have meaningfully changed this perception, market strategists said.
JOLTS data released Tuesday showed more than 10 million jobs remained open. Analysts noted that the ADP private sector employment report released on Thursday was stronger than expected, which triggered a selloff in stocks.
Later Friday morning in New York, the ISM services sector index for December turned negative for the first time since May 2020, indicating a slowdown in the all-important services sector. The ISM services index slowed to 49.6% in December from 56.5%, below forecast.
The drumbeat of cautious Fedspeak continued on Friday, with Federal Reserve Governor Lisa Cook saying that inflation “remains far too high, despite some encouraging signs lately.” The pace of inflation has cooled in recent months, according to the consumer-price index.
Atlanta Fed President Raphael Bostic said on CNBC Friday that the December jobs data “doesn’t really change my outlook at all.”
A number of other Fed speakers are expected Friday, including Richmond Fed President Tom Barkin at 12:15 p.m. and Kansas City Fed President Esther George at 1 p.m.
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The numbers: The U.S. generated 223,000 new jobs in December to mark the smallest increase in two years, but the labor market still showed surprising vigor even as the economy faced rising headwinds.
The unemployment rate, meanwhile, slipped to 3.5% from 3.6%, the government said Friday.
The jobless rate has touched 3.5% several times since 2019. That matches the lowest rate since 1969.
One good sign for Wall Street and the Federal Reserve. Hourly pay rose a modest 0.3% last month, suggesting wages are coming off a boil.
The increase in wages over the past year also slowed to 4.6% from 4.8%, marking the smallest gain since the summer of 2021.
U.S. stocks
DJIA,
SPX,
rose in premarket trades and bond yields edged higher after the report.
Economists polled by The Wall Street Journal had forecast a smaller increase in new jobs of 200,000.
The resilient labor market is a double-edged sword for the Federal Reserve.
For one thing, a scarcity of workers has driven up wages and threatens to prolong a bout of high inflation. The Fed wants the labor market to cool off further to ease the upward pressure on prices.
Yet the strong labor market also offers the best hope for the Fed to avert a recession as it jacks up interest rates to the highest level in years. Higher rates reduce inflation by slowing the economy.
James Bullard, president of the St. Louis Federal Reserve, said on Thursday the odds of so-called soft landing have gone up in part because of the sturdy labor market. He was referring to a Goldilocks scenario in which the central bank vanquishes inflation without causing a recession.
Senior Fed officials still want to see the jobs market slacken some more, however. They are likely to keep raising rates — and keep them high — until demand for labor, goods and services ease up.
Big picture: The U.S. economy has shown more fragility, especially in segments like housing and manufacturing that are sensitive to high interest rates. Many economists predict a recession is likely this year due to the higher cost of borrowing.
The Fed, for its part, is trying to thread the needle: Bring down high inflation and keep the economy out of recession.
Whatever the outcome, one thing is virtually certain: The unemployment rate is expected to rise as U.S. growth wanes. Whether it’s enough to help the Fed achieve is far from clear.
Key details: Health care providers, hotels and restaurants accounted for most of the increase in employment last month. They added a combined 150,000-plus jobs.
Hiring was weaker in most other sectors, suggesting that the labor market is likely to soften further.
High-tech has been hit particularly hard and is experiencing a wave of layoffs.
Employment in so-called professional businesses, which includes some tech, fell by 6,000, largely reflecting fewer temps being hired. It was the only major category to post a decline.
The share of working-age people in the labor force — known as the participation rate — rose a tick to 62.3%.. A lack of people looking for work is a chief source of the labor shortage.
Hiring in November and October was little changed after government revisions. The economy added 256,000 jobs in November and 263,000 in October.
Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to open higher in Friday trades.
Investors worry a strong labor market will push the Fed to take sterner measures to slow the economy. The slowdown in hiring and wage growth is likely to be seen in a positive light.
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