Wall Street closed lower on fears that the Fed will aggressively raise interest rates to rein in inflation.

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The positive report on unemployment in the US has cast doubt on investors, who fear that price increases have yet to reach their peak.

A worker at the New York Stock Exchange (REUTERS / Andrew Kelly)
A worker at the New York Stock Exchange (REUTERS / Andrew Kelly)

Stocks closed mostly lower on Friday, New data on the hot US labor market suggest that the Federal Reserve won’t stop its aggressive rate hikes anytime soon.

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this S&P 500 fell 0.2% and nasdaq lost 0.5%, dow jones registered industrialists. little snow .

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Employers unexpectedly ramped up their hiring last month, adding hundreds of thousands of jobs more than anticipated. data, economy not be in a recession It also undermines investors’ hopes. inflation It may be near the top. Treasury rates soared.

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“It reminds investors how uncertain Fed policy is, and strong labor market data shows how far the Fed has to go,” he said. charlie ripley Senior investment strategist at Allianz Investment Management.

Workers on the New York Stock Exchange (REUTERS / Brendan McDermid)
Workers on the New York Stock Exchange (REUTERS / Brendan McDermid)

Shares of companies technological and other high-growth companies again pulled the load amid concerns about rising interest rates.

Beyond the country’s strong contraction growth fees workers too sped up unexpectedly last month. This is beneficial for households trying to keep up with the fastest price increases in the last 40 years. But there is also growing concern on Wall Street about the possibility of inflation taking hold of the economy.

Higher wages may strain companies raise the prices of their products to preserve profits that could lead to what economists call wage price spiral.

Of course, some market watchers also pointed to Friday’s employment report numbers. they argue that the labor market may not be as strong as headline numbers imply. For example, the number of people with multiple jobs has increased by more than half a million. brian jacobsen Senior investment strategist at Allspring Global Investments.

This was mostly from people who already had a full time job and the second job is part time. “Perhaps this is more superficially impressive than essentially impressive.”

Fed may aggressively raise rates again (REUTERS/Andrew Kelly)
Fed may aggressively raise rates again (REUTERS/Andrew Kelly)

The clearest move on Wall Street came from the bond market, where Treasury yields soared just after the jobs data were released. ANDThe two-year Treasury yield, which tends to follow expectations of Fed action, rose to 3.21% from 3.05% on Thursday. The 10-year interest rate rose from 2.69% to 2.84%.

Wall Street shows best month for stocks since end of 2020 a rally fueled mainly by falling yields in the bond market. The hope on Wall Street was that the economy had slowed enough. Federal Reserve loosen rate hikes.

The increase in mortgage rates especially affected the housing sector. Federal Reserve has increased short-term interest rates four times this year. The last two hikes were three times higher than usual, and the Fed raised its overnight benchmark rate from near zero last week. 2.25 points.

“Today’s data is much stronger than expected, making things harder” Rick Rieder, BlackRock’s chief investment officer for global fixed income, said in a statement to the Federal Reserve. He said the assumption is now that the Fed will raise short-term rates another 0.75 percentage points next month, unless there is an expected inflation report for next week. “Show any dramatic weakness that seems unlikely at this point.”

Traders were quick to bet biggest hikes At the next Fed meeting, they reversed their expectations from the day before and now largely expect the Fed to rise 0.75 points instead of half a point.

these climbs damage to short-term investment prices and because they deliberately slow down the economy, they increase the risk of recession later on.

These expectations also mean that the two-year Treasury yield will remain above the 10-year yield. This is unusual, and some investors see it as a sign that the economy will fall into recession in the next year or two.

On foreign exchanges, Sensex’s India It rose 0.2% after the Reserve Bank of India raised its benchmark rate by half a point to 5.4%.

this nikkei The Japanese 225 rose 0.9%, while the German DAX fell 0.6%.

(with information from AP)

Source: Info Bae

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