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Friday, June 21, 2024

Stocks Slide as Strong Jobs Report Fuels Fed Hawkish Bets – Weekly Market Recap

U.S. Stock Market Declines Amid Concerns of Fed’s Hawkish Stance on Inflation

Key Takeaways:

  • U.S. stocks (S&P 500) declined by 1.9% this week, ending a multi-week uptrend, while the U.S. dollar index (DXY) fell by 0.6%.
  • Commodities, particularly gold and oil, saw significant gains of 3.3% and 4.5%, respectively.
  • The March non-farm payrolls report showed a strong increase in jobs (303,000), exceeding expectations and indicating ongoing labor market strength and tightness.
  • The stock market pullback likely reflects concerns that robust economic data will keep the Federal Reserve on a hawkish stance in its battle against inflation.

U.S. Stocks Decline on Strong Jobs Data

U.S. stocks experienced a pullback this week, with the S&P 500 declining nearly 2% after several weeks in an uptrend. The U.S. dollar index (DXY) also fell by 0.2%. However, commodities saw strength, with gold rising 4.06% and oil (BCO) surging 5.29% on the week.

S&P 500 5 Day
DXY 5 Day

March Non-Farm Payrolls Report Exceeds Expectations

The market decline came despite stronger-than-expected economic data. The highly anticipated March non-farm payrolls report showed a gain of 303,000 jobs, well above the 200,000 consensus forecast. The private sector added 232,000 of those jobs, also beating expectations.

The unemployment rate ticked down to 3.8% from 3.9% the previous month, reaching a new cycle low. The labor force participation rate increased to 62.7%. Overall, the jobs report points to ongoing strength and tightness in the labor market. This could lead to more inflation, and the Federal Reserve continuing its tightening cycle.

Unemployment Rate

Mixed Economic Data Points to a Resilient Economy

Other economic releases were mixed but generally solid. U.S. trade data for February showed a slightly larger-than-expected deficit of $68.9 billion, as both imports and exports came in higher than projected. Weekly jobless claims edged up to 221,000 but the 4-week average remains low at 214,250. The JOLTs report indicated job openings remain elevated at 8.8 million as of February.

While manufacturing PMI surveys from both S&P Global and ISM disappointed relative to forecasts, they still signaled expansion with readings above 50. Services sector PMIs were also a touch softer than expected but in growth territory. The S&P Global Composite PMI printed at a healthy 52.1.

Federal Reserve Maintains Hawkish Stance on Inflation

The pullback in stocks likely reflects concerns that the strong jobs numbers and firm growth outlook will keep the Federal Reserve on a hawkish path against inflation. At its March meeting, the Fed kept interest rates unchanged in a range of 5.25-5.50% but signaled it does not anticipate cutting rates anytime soon. The FOMC statement emphasized that the committee “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”


With the economy resilient and the labor market still historically tight, markets are dealing with the prospect of interest rates staying higher for longer than expected. The rise in oil prices is also stoking fears of persistent inflationary pressures. While year-over-year inflation rates have eased substantially from their 2022 peak, the Fed is looking for more convincing signs that price growth will return to its 2% target on a sustainable basis before contemplating monetary easing.

Want more context? Read our last market recap from the week before

Publisher and editor of LJLNews. I am a Stock Market enthusiast, with an interest for politics. I hope you enjoy reading the articles! Contact me at: Lazaruslucas@ljlnews.com

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