Markets Swing on Meta and, Maybe Now, Jobs

Highs and lows Last week, markets swung wildly on economic news as investors tried to interpret signals from the Fed regarding inflation...

Last week, markets swung wildly on economic news as investors tried to interpret signals from the Fed regarding inflation and interest rates. This week, corporate earnings took center stage and things looked more stable – for a while.

Volatility is back, big time. Meta drove the market yesterday following an earnings report which revealed several signs of trouble. Its decline erased more than $230 billion from its market capitalization, the largest one-day dollar loss in history.

But after the bell, Amazon declared exceptional income, and the market turned sharply in after-hours trading, with Amazon jumping nearly 20% at one point. (For those who score pointsthat meant Meta’s Mark Zuckerberg lost $29 billion in net worth while Amazon’s Jeff Bezos gained $20 billion.) Tech stocks like Pinterest and Snap that were pulled down by Meta also backtracked after reporting better-than-expected earnings: Snap shares rose more than 50% in after-hours trading.

Markets are stable today, but the jobs report could cloud everything again. Futures suggest a moderate open, for now, but focus has returned to the economy. This morning the government will report on the number of jobs added by employers in January, and like all the other signals lately, it’s gonna be a mess. Economists’ forecasts range from a gain of 250,000 jobs to a loss of 400,000, an unusually wide range. “It’s going to be a big mess,” said Skanda Amarnath of Employment America, a research group.

  • The Omicron coronavirus wave peaked in mid-January, just as the government was collecting data for the report, but there is little evidence so far that the wave has caused lasting economic damage.

  • The jobless rate could drop even if hiring slows, as the surge in Covid cases may have led some to put job searches on hold. The government considers a person to be unemployed only if they are actively seeking employment.

  • The first month of the year is usually difficult to measure anyway. Employers are releasing workers from holidays, and the ebb and flow of the pandemic risks disrupting normal seasonal adjustments.

What will all of this mean for the Fed’s planned rate hikes? Probably not much, said Vincent Reinhart, chief economist at Dreyfus and Mellon and a former Fed. That said, if the wage bill is weaker than expected, it could reduce the chances of the central bank raising interest rates by a more aggressive half point, instead of the expected quarter point, in March.

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Newsrust - US Top News: Markets Swing on Meta and, Maybe Now, Jobs
Markets Swing on Meta and, Maybe Now, Jobs
Newsrust - US Top News
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