Market Extra: A soft February jobs report could set up the next rally for stocks, but can it really save them from Fed hawks?

by | Mar 9, 2023 | Stock Market

Investors in the U.S. stock market will be watching Friday’s jobs report closely with a hope that any signs of weakness in the labor market could give the Federal Reserve more room to go easy with its next interest-rate hike in two weeks.  Investors currently expect the Fed to re-accelerate the pace of rate hikes at its March 21-22 meeting, which could lift the terminal rate above the 5% to 5.5% level officials had forecast in December. The views deepened after Fed Chair Jerome Powell’s semiannual monetary policy testimony before Congress earlier this week. 

Powell said Tuesday that the central bank may need to raise interest rates higher than expected in response to recent strong economic data, while emphasizing that monetary policy decisions will remain “data dependent.” A day later, he said no decision has been made on the potential size of interest-rate hike in March. Powell’s comments put more focus on a flurry of economic data due between now and March 22, which includes Friday’s February jobs report, next week’s consumer-price index, and updated readings on the producer-price index and retail sales. See: Want to know the precise number of jobs that would push the Fed to hike by 50 basis points? There isn’t one. Investors hope a “softer” employment report on Friday could alter monetary policy expectations and get the Fed to take a lighter touch in raising interest rates.  The U.S. economy likely added 225,000 jobs in February, according to economists polled by The W …

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