Markets Are Coming Back
Futures just jumped after what appears to be a pretty disappointing jobs report.
Currently, Dow futures are down by around 16 points after being down by over 100 points earlier today.
U.S. companies added just 209,000 nonfarm payrolls in July, which was less than the 230,000 expected by economists.
The unemployment rate ticked up to 6.2% from 6.1%.
The Dow plunged 317 points on Thursday.
Believe it or not, the Dow is now down 0.08% since the beginning of the year. (The S&P 500, a much broader measure of stocks, is up 4.4% during that period.)
And there appears to be no shortage of worries out there to exacerbate the selling.
"Disturbing geopolitical events are now added to a list of fundamental investor concerns (QE tapering, a chronic shortage of sensible investment opportunities, weak inflation, lackluster profit growth, etc.) that in our view were largely being ignored by investors desperate for yield," Societe Generale's Andrew Lapthorne said in a note to clients today. "However this investor complacency encouraged and supported by low asset volatility, buoyant equity prices and extremely low bond yields is increasingly being tested."
Amid Thursday's selling, traders focused in on the second-quarter employment cost index report, which signaled that wages were rising much faster than expected.
This is a big deal, because it's both a sign of inflation and labor-market tightness, two forces that put pressure on the Federal Reserve to tighten monetary policy sooner rather than later.
The prospect that the Fed could tighten monetary policy sooner than expected is frequently blamed for causing market volatility. The idea is that if the Fed tightens, then it pulls liquidity out of the credit markets, which indirectly would pull liquidity out of the stock markets.
Today's "disappointing" jobs report arguably gives the Fed a little more flexibility to keep policy easy.
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