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Markets — and Powell — are holding their breath for Friday's jobs report.
What you need to know today
- Stocks in the U.S. finished Wednesday mixed, with the Dow Jones Industrial Index the only major index to fall. European markets edged higher — Stoxx 600 was up 0.12% — perhaps another sign of Europe's resilience over the U.S
- The Federal Reserve has to hike interest rates until it creates a recession — because the central bank doesn't know the exact rate that will dampen inflation, according to one economist. That hasn't stopped analysts from estimating the peak rate. Goldman Sachs expects 5.5% to 5.75%, while BlackRock predicts 6%
- Two data points released yesterday showed that the labor market's still tight. There were 10.824 million job openings in January, down 410,000 from December but still higher than expected. Private payrolls in February increased by 242,000 month over month, reported payroll services firm ADP.
- Silvergate Bank, a crypto-focused bank with more than $11 billion in assets, will be wound down and liquidated. Last week, the bank was dropped by cryptocurrency companies worried about its financial health — Silvergate suffered a bank run after crypto exchange FTX imploded.
- PRO Yesterday was International Women's Day. To commemorate the occasion, CNBC highlighted this ETF, which only invests in companies led by women — and is expected to rise by 20% this year, beating the S&P 500.
The bottom line
Yesterday, Fed Chair Jerome Powell called the jobs market "extremely tight." It was a prescient comment.
Two jobs reports released yesterday showed the labor market remaining stubbornly robust. First, the U.S. Labor Department's Job Openings and Labor Turnover Survey, or JOLTS. While it indicated that job openings fell in December, the absolute number's still uncomfortably high (for economists worried about inflation, at least): there were 1.9 job openings per available worker. Indeed, according to ADP, private payrolls in February increased, led by an 83,000 addition in the leisure and hospitality sector. The combination of a tight labor market and — perhaps more crucially — the concentration of job additions in the service sector means that risks of inflation from services persist.
There's some good news buried in the reports, however. (Again, a caveat first: It's only good news in terms of controlling inflation; it might not be music to workers' ears.) The JOLTS report showed that workers quitting — a sign of confidence in mobility — fell to the lowest level since May 2021. Layoffs rose sharply, hitting 241,000, a 16% month-over-month increase. Wage growth decelerated in February, too. Workers remaining in their jobs saw a 7.2% annual increase, down 0.1 percentage points from January; job changers saw a more drastic fall of 0.6 percentage points.
Markets chewed on that mixed bag of data and made little movement. The Dow dipped 0.18%, while the S&P 500 edged 0.14% higher and the Nasdaq Composite rose 0.4%. They also paused yesterday's selloff after hearing Powell's fresh comments on Wednesday that the Fed has not decided what to do during its March meeting. "We will be guided by the incoming data," Powell said, suggesting that he, like investors, is holding his breath until Friday, when the more comprehensive nonfarm payrolls report is released.
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