Stocks took a dive on Friday in response to surprisingly positive economic news, a situation that warrants further clarification.
In December, unemployment had dropped to 4.1%.
The stock market reacted with worry. The Dow Jones Industrial Average finished the day with a 697 point drop, which amounts to a 1.6% decrease. The S&P 500 and Nasdaq each declined by 1.5% and 1.6%, respectively. These losses put all three indexes in the red for 2025 so far.
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There’s virtually no doubt that the Fed will keep interest rates stable at their January meeting. Traders anticipate it may not implement another interest rate decrease until at least the summer. Historically, the Fed lowers interest rates to boost economic growth and raises them to curb it.
A strong jobs report spells trouble for the stock market.
A strong jobs report will be a plus for the US economy and the value of the US dollar, but it could be bad news for stock investors, according to Seema Shah, chief global strategist at Principal Asset Management.
Other observers concurred.
“People could be in for a bumpy ride as the market adjusts to revised forecasts for fewer interest rate cuts,” said Gina Bolvin, President of Bolvin Wealth Management Group in Boston.
The current metric is up from 2.8% a month ago.
When bond yields increase, the prices of bonds tend to decrease.
Today looks more favorable for bitcoin investors. The cryptocurrency has risen about 3% based on CoinDesk’s data, though it still is significantly below $100,000.
The story has been updated with new details.
This news story was first published on USA TODAY.
