Stocks surge after better-than-expected jobs report

By Paul R. La Monica, Alicia Wallace and Nicole Goodkind, CNN

Updated 10:14 AM ET, Sat January 7, 2023
13 Posts
Sort byDropdown arrow
9:53 a.m. ET, January 6, 2023

Wall Street euphoria about jobs may be overdone

From CNN Business' Paul R. La Monica

Cue the theme song from "Curb Your Enthusiasm." One market strategist thinks investors are WAY too excited about the December jobs report.

Principal Asset Management chief global strategist Seema Shah thinks that even though "expectations for a soft landing in the economy have likely been boosted in light of today’s jobs report," that is probably the wrong take.

Shah argued in a report that "with the unemployment rate back to the historic low of 3.5%, how realistic is it to expect wage growth to move meaningfully lower?"

In other words, labor conditions are still tight and companies are going to have to keep paying more in compensation to attract talent.

With that in mind, she thinks the Fed "will likely be skeptical" and "that there is still so much work ahead of them." Shah said that short-term interest rates, currently in a range of 4.25% to 4.5%, "are set to rise above 5% within just a few months."

The takeaway? Shah wrote that "a hard landing looks to be the most likely outcome this year. The recession clock is ticking."

9:50 a.m. ET, January 6, 2023

Economist on jobs report: Enjoy this stability while it lasts

From CNN Business' Nicole Goodkind

Jobs may be the phrase of the week, but the word of the year is still "recession."

In the current economy-driven market, the question of whether a soft-landing is still possible is at the top of every investors' mind.

Today's jobs report may have assuaged some of those fears: Employment remained strong while wage growth eased -- a potential Goldilocks situation for a Fed that's looking to avoid an inflation-driving wage-price spiral without crashing the economy.

But Morning Consult's chief economist John Leer isn't convinced that a soft-landing is in the cards.

"Job growth remains strong, but it’s clearly slowing. Highly publicized layoffs in the tech sector have not affected the broader economy given how many job openings still exist, and higher interest rates have yet to meaningfully affect the demand for workers," he wrote in a note Friday morning.

The takeaway: "As those higher borrowing costs constrain business investment during the first half of this year, hiring will also pull back," wrote Leer. "We should enjoy this period of relative economic stability while it lasts."

9:32 a.m. ET, January 6, 2023

Stocks open higher as wage growth slows

From CNN Business' Nicole Goodkind

US stocks opened higher on Friday after the December jobs report showed wages grew more slowly than expected last month — indicating that the Federal Reserve may be gaining ground in its efforts to tame inflation.

Bad news continues to be good news for investors: Signs of a weakening US labor market are buoying stocks and decreasing fears that strong labor data would continue to drive hawkish Fed monetary policy.

Wages grew by 0.3% in December, according to the government's nonfarm payrolls report, falling short of economists’ expectations of 0.4% and down from November’s 0.6%. 

Yet the US economy added 223,000 jobs last month, higher than the expected 200,000 jobs. The unemployment rate also moved back down to the historic low of 3.5%, from 3.7% in November. 

Today’s stock rebound comes after the Dow fell more than 300 points on Thursday, following the release of stronger-than-expected ADP private payrolls data.

The report showed employers added 235,000 jobs in December, above analyst estimates. Wages also grew faster than estimates. Government data also showed that weekly jobless claims came in below expectations, dealing another blow to investors hoping for a less hawkish Fed. 

The Dow was up 248 points, or 0.8%, on Friday.

The S&P 500 gained 0.7%. 

The Nasdaq Composite was 0.5% higher.

8:41 a.m. ET, January 6, 2023

Stock futures pop after jobs report

From CNN Business' Paul R. La Monica

Wall Street seems set to cheer the December jobs numbers.

Stock market futures, which were flat before the jobs report came out, moved solidly higher after the US government reported that 223,000 jobs were added last month...more than expected. The unemployment rate also dipped, to 3.5%.

Dow futures were up more than 100 points, or 0.3%. The S&P 500 and Nasdaq also picked up steam in premarket action following the jobs release. The main reason for the optimism? The pace of wage growth slowed, with worker pay rising 4.6% over the past 12 months. Wall Street was expecting wage growth of 5%.

Wages are a key driver of inflation. So the market is betting that the latest numbers could give the Federal Reserve more reasons to pull back on its pace of interest rate hikes...and potentially even stop raising rates later this year.

8:34 a.m. ET, January 6, 2023

US economy added 223,000 jobs in December

From CNN's Alicia Wallace

The US economy added 223,000 jobs in December, according to the monthly employment report from the Bureau of Labor Statistics, capping a year of extraordinary job growth and marking the second-best year in history for the labor market.

The unemployment rate dropped to 3.5% from a revised 3.6% in November.

8:19 a.m. ET, January 6, 2023

Tesla stock slides again on more China price cuts

From CNN Business' Paul R. La Monica

Tesla's stock plunged more than 65% in 2022 and this year is off to another less-than-electrifying start for investors in Elon Musk's car giant.

Shares of Tesla (TSLA) were down 7% in premarket trading Friday following the news that the company was cutting prices on many of its models in China for the second time in the past few months.

The price cuts seem to be an acknowledgment that Tesla is concerned about softening demand in the world's most populous nation. As my colleague Laura He notes, China's economy is slowing...and Tesla also faces stiff competition from Chinese electric car companies such as Nio, Xpeng and Warren Buffett/Berkshire Hathaway-backed BYD.

Tesla investors got more shockingly bad news earlier this week when the company reported weaker-than-expected deliveries figures for the fourth quarter.

The tough times for Tesla may not end anytime soon. Competition in the US is heating up too. The stock has already plummeted more than 10% so far in 2023.

And if all that weren't enough, some Tesla shareholders and analysts are growing increasingly nervous about Musk being distracted (even more than usual) as he attempts to resuscitate Twitter following his $44 billion purchase of the social media company.

Musk's focus on Twitter could be one reason why Tesla's top Chinese executive, Tom Zhu, has reportedly been given more oversight of Tesla operations in North America.

7:42 a.m. ET, January 6, 2023

Tech layoffs will begin impacting the broader economy in the coming months, says chief economist

From CNN’s Kevin France

Despite robust job growth in the overall economy, tech layoffs will start to impact the broader economy in the coming months.

"I think we're seeing an inflection point, the rate of jobs growth is slowing and a lot of these tech layoffs that we're hearing about, I think are going to start materializing across the broader economy by the end of the first quarter," said John Leer, Chief Economist at 'Morning Consult'

Friday’s monthly jobs report comes as tech layoffs have swept across the labor market. Amazon, HP, Meta, and Salesforce are among some tech giants that have implemented layoffs in recent months.

Leer noted that, as the economy continues to grow, there will be increasing pressure for the Fed to continue to hike rates to cool what's a red-hot economy. 

"So the Federal Reserve wants to raise interest rates to try to curb the demand for workers and hopefully bring down wages, which in fact will, will then ultimately bring down inflation", Leer said to CNN Chief Business Correspondent Christine Romans. "It's a challenging balancing act of course because they don't want to drive the economy into a recession."

7:00 a.m. ET, January 6, 2023

Stocks rise modestly

Stocks: The US stock market was modestly higher after sinking sharply Thursday ahead of today’s jobs report. Dow futures were up 60 points, or 0.2%. S&P 500 futures rose 0.1%. Nasdaq futures were 0.1% lower. 

Fear & Greed Index: 44 = Fear

Oil & gas: US oil prices rose 0.5% to $74 a barrel. Average US gas prices held steady at $3.29 a gallon. 

6:57 a.m. ET, January 6, 2023

What to expect from the jobs report

From CNN Business' Alicia Wallace

The latest monthly jobs report, set to be released at 8:30 a.m. ET, is expected to show that the US economy added 200,000 jobs in December, with the unemployment rate holding steady for the third-straight month at 3.7%.

The Labor Department’s final monthly employment tally for 2022 likely brings with it some familiar story lines.

— Job growth is expected to remain robust, although slower than the breakneck pace of historically high job gains during the early stages of economic recovery from the pandemic.

— Workers are still not returning to hard-hit sectors such as leisure and hospitality, public service and child care.

— The strong labor market, while it keeps the economy churning, is a little too consistently vigorous for the Federal Reserve’s needs to reduce inflation by tempering demand.

— The tight labor market needs more workers, and wage growth still hasn’t returned to pre-pandemic levels, which would help quell fears of a wage-price spiral, when higher wages cause price increases that in turn cause higher wages.

Read more