US Stocks Plummet After Positive Jobs Report
Wall Street experienced a significant downturn on Jan 10, triggered by a robust employment report that suggested the central bank might scale back on interest rate cuts this year. The Dow Jones Industrial Average dropped by 1.6 per cent to 41,938.45, while the S&P 500 Index fell by 1.5 per cent to 5,827.04. The Nasdaq Composite Index, known for its focus on technology stocks, also retreated by 1.6 per cent to 19,161.63.
This sudden decline followed a Department of Labor report revealing that the US economy added 256,000 jobs in December, surpassing expectations and resulting in a drop in the unemployment rate to 4.1 per cent. As a result, the yield on the 10-year Treasury note saw a significant increase before stabilizing.
Investors interpreted these impressive labor market numbers as an indication that the Federal Reserve might be more conservative in lowering interest rates. Sam Stovall from CFRA mentioned that despite the Fed’s rate cuts last year due to the impact of the Covid-19 pandemic, policymakers are now focusing on carefully managing inflation levels.
Stovall predicts that January will be marked by volatility, driven by concerns about interest rates and the upcoming earnings reports. The CME FedWatch tool currently suggests a 97 per cent probability of the Fed keeping rates unchanged at its next policy meeting.
Among individual companies, Apple saw a decline of 2.4 per cent, while Nvidia shares fell by 3 per cent. This news serves as a reminder of the dynamic nature of the stock market and the importance of staying informed about the latest developments in the finance world.
