Stocks Fall Amid Strong Labor Demand Data
Market Reaction to Labor Data
The three major U.S. stock indexes dropped by about 1% on Tuesday, and the yield on benchmark 10-year Treasuries reached a four-month high. This was in response to data revealing robust labor demand, raising concerns that the Federal Reserve might postpone interest rate cuts.
Dollar and Risk Assets Movement
The dollar initially surged to a four-month high against major trading currencies but later retreated. Simultaneously, risk assets, including stocks, took a hit amid worries that rate cuts might be delayed. Gold prices also soared, reaching new peaks.
Impact on Job Openings and Economy
U.S. job openings slightly increased to 8.756 million in February, indicating strong labor demand. This positive economic data, coupled with rising inflation, may postpone potential Federal Reserve interest rate cuts.
Global Market Performance
Global stocks, including on Wall Street, experienced declines, with the Nasdaq, S&P 500, and Dow Jones all posting losses. Tesla’s shares also plummeted after missing delivery estimates.
Interest Rate Expectations and Treasury Yields
The bounce in manufacturing data and consumer spending led to a surge in Treasury yields, especially the benchmark 10-year note. Expectations for rate cuts dwindled as economic indicators painted a different picture.
European Market and ECB Rate Cut Speculation
In Europe, manufacturing activity declined further, while German inflation eased. Eurozone inflation data is eagerly awaited for insights into potential rate cuts by the European Central Bank.
Financial Market Volatility
The yen strengthened against the dollar, oil prices surged due to geopolitical tensions, and gold prices hit record highs, reflecting market uncertainties and investors’ search for safe-haven assets.
