Discussing Why Positive Employment Data Still Resulted in Stocks Going Down
February 6, 2023
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the financial markets this week. My name is Jake Sanders, and I am a partner at Wealth E&P and operate as a Wealth Advisor and Certified Financial Planner.
Last week we saw an increase in all three of the major indices. On Friday we saw a release of the January jobs report, which came in largely better than expected! However, subsequent to that, the market gave back a good bit of return for the week on Friday. A lot of you have been asking me the question: “Why does that happen? Why do seemingly good economic news and data cause the market to trade off?”
While jobs are undoubtedly good for the individuals and families they represent in this particular situation, they have an opposite relationship with inflation in a sense. In other words, lower unemployment and higher wages equal higher company costs. Those costs are ultimately passed on to the consumer at the end of the day, and therefore: we have more inflation.
At this point, the market is largely trading on inflation, expectations about inflation, and uncertainty about what the Federal Reserve is going to do next. If you have questions about that or want to find out more about our process or how we navigate times like these, please feel free to reach out or visit www.wealthep.com. Otherwise, stay tuned for our next Market Minute! We hope you have a great rest of the week!
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.