US stocks are down after Wall Street digests hawkish Fed minutes, strong labor data and another round that suggests the Fed will keep rates higher. This latest data confirms his Fed message that more rate hikes are coming. The Federal Reserve’s George raised his interest rate and preferential rate forecasts to above 5% and said it would stay there for some time.
Bond markets are still hoping for a rate cut at the end of the year, but wage pressures may eventually force the Fed to postpone rate cut requests until next year.
American companies have seen a lot of bad news, confirming fears that the technology selloff will continue for some time. Amazon’s record-breaking layoff announcement was much bigger than people thought. Big tech companies’ strategy this quarter is cost-cutting plans that ensure long-term success. The over 18,000 job cuts were higher than the 10,000 positions expected.
Since 2015, Amazon has recorded strong hiring numbers, bringing its total workforce to over 1.5 million. The bottom may not be quite in place yet, as Amazon may not have completed its cost-cutting efforts.na
The ADP’s private payroll report and weekly unemployment insurance claims reminded traders that the labor market is far from cooling. Individual payrolls for December increased by 235,000, well above consensus expectations of his 153,000. The economy is clearly weakening, but the labor market refuses to collapse. That should start to weaken and perhaps starting next week unemployment claims will start to get much higher. There were 204,000 unemployment claims this week, well below the economists’ consensus range of 210,000 and his 238,000. The Challenger Report also showed that December job cut announcements were down 43%.na
The labor market is showing signs of weakening as American companies appear to be steadily announcing layoffs and cost-cutting measures.For now, the Fed should stick to the script and say rates will hold for longer.
Bitcoin is largely unchanged despite the risk-off session on Wall Street. The Federal Reserve may need to raise rates further, but that doesn’t look like it’s going to bring crypto down. Also in crypto news, there is a sharp drop in Silvergate Capital stock. Banks were forced to liquidate assets at losses to cover $8.1 billion in withdrawals.
Cryptocurrency lender Genesis is reportedly planning another layoff to cut its workforce by 30%.
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