Stocks tumble after better-than-expected jobs report

By Paul R. La Monica, CNN Business

Updated 6:13 p.m. ET, December 2, 2022
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4:27 p.m. ET, December 2, 2022

US stocks close mixed as new jobs data spooks investors

From CNN Business' Nicole Goodkind

Traders at the New York Stock Exchange today.
Traders at the New York Stock Exchange today. (Michael M. Santiago/Getty Images)

US stocks closed mixed on Friday as investors digested a hotter-than-expected jobs report ahead of the Federal Reserve’s December policy decision.  

The US gained 263,000 jobs in November, 63,000 above the consensus estimate. The larger surprise was that average hourly earnings rose by 0.55%, the fastest pace since January.  

That’s good news for American workers but bad news for investors. Higher wages add to higher inflation. That means that there will be increased pressure on the Fed to continue its regime of painful interest rate hikes to curtail inflation. 

Markets still closed out the week higher after surging on Wednesday when Fed Chair Jerome Powell gave a speech that indicated the pace of rate hikes could slow starting as early as December. 

The Dow closed up 35 points, or 0.1%.

The S&P 500 fell by 0.1%.

The Nasdaq Composite closed 0.2% lower. 

For the week, the Dow was up 2.1%, the S&P 500 rose 1.1%, and the Nasdaq added 0.2%. 

As stocks settle after the trading day, levels might still change slightly.

12:19 p.m. ET, December 2, 2022

Stocks stabilize in midday trading

Wall Street may be reconsidering what the surprisingly strong jobs report may mean for stocks. After taking a plunge at the opening bell, the market stabilized a bit by lunchtime.

Strong wage gains could keep the Federal Reserve in rate-hiking mode for longer than traders had been hoping. But investors also can't forget how relatively dovish Fed chair Jerome Powell sounded just a few days ago. Powell seems to realize that the Fed shouldn't raise rates too sharply, lest they unnecessarily send the economy into a recession.

The Dow was down about 80 points, or, 0.2% on Friday afternoon.

The S&P 500 dipped 0.5%.

The Nasdaq Composite fell 0.7%.

12:37 p.m. ET, December 2, 2022

Tech job market still going strong despite mass layoffs

by CNN Business' Alicia Wallace

A person walks past the offices of Meta, the parent company of Facebook and Instagram, in King's Cross, London, on November 9.
A person walks past the offices of Meta, the parent company of Facebook and Instagram, in King's Cross, London, on November 9. (Joshua Bratt/PA Images/Getty Images)

The November jobs report showed that despite the slew of layoff announcements from some of the biggest names in technology —11,000 cuts at Meta, 10,000 at Amazon and thousands more at Twitter — the tech sector is still going strong, and even adding jobs.

There were 52,771 job cuts announced in tech last month, according to Challenger, Gray & Christmas data released Thursday. That's the highest monthly total for the sector since 2000, when the executive outplacement firm started tracking industry-specific layoff announcements.

But despite the mass layoffs, weekly jobless claims have barely budged, the unemployment rate has held steady, and sectors such as information technology even added jobs in November (19,000 in the case of IT).

So what's the disconnect? Economists have answers:

First, the technology workers affected by the layoffs are likely quickly getting other jobs either in or outside of tech, Jim McCoy, vice president of solutions for ManpowerGroup, told CNN Business Friday.

Additionally, the labor market remains considerably tight — there were 1.7 open positions for every job-seeker in October — and several industries are continuing their post-pandemic recovery and staffing up to meet the continued surge of consumer demand for services.

"You're seeing weakness in Silicon Valley and on Wall Street, but that is still largely offset by strength and resilience on Main Street, where job growth is still being propped up by pandemic recovery," Julia Pollak, chief economist at ZipRecruiter said this week.

11:53 a.m. ET, December 2, 2022

Wage growth spooking the market...and the Fed?

The Federal Reserve building in Washington, DC, in January.
The Federal Reserve building in Washington, DC, in January. (Joshua Roberts/Reuters)

American workers are still taking home pretty big paychecks. That sounds like good economic news. But don't tell that to Wall Street.

The 5.1% increase in year-over-year hourly earnings that the government reported in Friday's jobs report is a concern for investors — and Jerome Powell. The Federal Reserve may need to keep raising rates for a while longer if wage growth remains this robust. That's because higher wages are a key component of inflation.

"Any idea that the Fed can make a meaningful shift is now called into question," said Michelle Green, principal economist at Prevedere. Green said that as long as people are getting bigger pay bumps, they will likely keep spending at a healthy clip — which should in turn lead to more inflation pressure.

That could be problematic because it means the Fed may not be able to take its foot off the higher interest rate pedal just yet.

"The Fed is data-dependent. If inflation remains sticky, they will have to hike more," said Priya Misra, head of global rates strategy at TD Securities. Misra thinks the Fed may keep boosting rates, which are now at 3.75%, until they hit 5.5%. That's higher than what the market is expecting.

If the Fed has to keep boosting rates, the odds of a steeper economic downturn increase as well. "The probability of recession has also increased," Misra said. "Investors are pricing in a benign recession but I'm not sure it's gong to be shallow or short."

Still, some are hopeful that the Fed will be able to threat the proverbial needle.

"The Fed wants below trend growth," said Garrett Melson, portfolio strategist with Natixis Investment Managers Solutions, adding he is "not ruling out" the notion that the Fed can engineer a so-called soft landing.

11:27 a.m. ET, December 2, 2022

The hot jobs number is actually the coolest all year

from CNN Business' Alicia Wallace

People attend a job fair held at the FLA Live Arena on June 23 in Sunrise, Florida.
People attend a job fair held at the FLA Live Arena on June 23 in Sunrise, Florida. (Joe Raedle/Getty Images)

The 263,000 jobs added during November was certainly hotter than economists had expected — Refinitiv had estimated 200,000 — but it's actually the lowest monthly gains seen all year. In fact, it's the lowest since all the way back in April 2021, which also saw a gain of 263,000. 

Factoring into this were two key revisions: September was revised down by 46,000 to 269,000 jobs, and October's 261,000 job gains were revised up by 23,000 to 284,000 jobs.

The numbers included in the jobs report, much like other key federal economic data, is subject to ongoing revisions and the monthly totals can change as the Bureau of Labor Statistics receives updated information from businesses and governmental agencies.

As it stands now, the preliminary November number shows a (very) gradual cooling effect, but by historical and pre-pandemic standards, the monthly gain is pretty high. From 2010 to 2019, the economy added an average 183,000 jobs per month, according to CNN Business tabulations of BLS data.

9:40 a.m. ET, December 2, 2022

US stocks open lower after jobs data comes in hot

from CNN Business' Nicole Goodkind

US stocks slid on Friday as investors digested the release of stronger-than-expected jobs data. The report stoked fears on Wall Street that the Fed would take the report to mean that it has more work to do in its battle against inflation, meaning higher interest rates to come. 

The economy added 263,000 jobs in November, coming in well above economists’ estimate of 200,000. Employment growth was widespread in both the goods-producing and service-providing sectors.

Average hourly earnings, which the Fed pays close attention to,  are also up 5.1% over the past year. Average hourly earnings have strengthened over the past three months, the opposite of what the Fed has been hoping for. 

This marks the last monthly employment report before the Federal Reserve’s meeting on December 13 and 14. The central bank is widely expected to raise interest rates by half percentage point. 

The Dow fell by nearly 400 points, or, 1.1% on Friday morning.

The S&P 500 was 1.4% lower.

The Nasdaq Composite was down 1.8%.

8:59 a.m. ET, December 2, 2022

Odds of smaller rate hike dip following jobs report

Chair of the U.S. Federal Reserve Jerome Powell at the Brookings Institution, on November 30, in Washington, DC. Powell discussed the economic outlook, inflation and the labor market.
Chair of the U.S. Federal Reserve Jerome Powell at the Brookings Institution, on November 30, in Washington, DC. Powell discussed the economic outlook, inflation and the labor market. (Drew Angerer/Getty Images)

So much for the Federal Reserve pulling back on those aggressive rate hikes?

Investors are a little more nervous following a stronger-than-expected jobs report Friday. Wage growth remains robust as well. The market had been betting that the Fed would raise rates by just a half-point at its December meeting (following four straight three-quarter-point hikes) thanks to a cooling off in inflation.

Traders are still pricing in about a 70% chance of a half-point increase later this month. But that's down from odds of nearly 80% on Thursday.

Of course, this is not the only bit of data that the Fed (and market) will get to see before the next rate decision on December 14. Important reads on inflation (both the producer price index and consumer price index) will be released before the Fed meets again.

8:51 a.m. ET, December 2, 2022

US economy added a robust 263,000 jobs in November

From CNN Business' Alicia Wallace

Help wanted sign is displayed in Deerfield, Ill., on Wednesday, Sept. 21.
Help wanted sign is displayed in Deerfield, Ill., on Wednesday, Sept. 21. (Nam Y. Huh/AP)

The US economy added 263,000 jobs in November, defying aggressive action from the Federal Reserve to cool the economy and bring down decades-high inflation.

The unemployment rate held steady at 3.7%, according to the latest monthly jobs snapshot from the Labor Department, released Friday morning.

Economists surveyed by Refinitiv had expected the pace of hiring to slow to a gain of only 200,000 jobs in October and the unemployment rate to stay flat at 3.7%.

8:54 a.m. ET, December 2, 2022

Market futures tank after jobs report

Traders work on the floor at the New York Stock Exchange on Monday, Nov. 28.
Traders work on the floor at the New York Stock Exchange on Monday, Nov. 28. (Seth Wenig/AP)

Good news is bad news for investors. Stock market futures tumbled after the government reported that 263,000 jobs were added in November, more than expected. The better-than-forecast jobs gains could keep the Federal Reserve hiking interest rates more aggressively for longer. The unemployment rate held steady at 3.7% as well.

Dow futures were down more than 400 points following the jobs report while S&P 500 and Nasdaq futures sank 1.5% and 2.4% respectively.