Market Overview

Weakest Jobs Report In 7 Months Puts Rate Hike At Serious Risk

Weakest Jobs Report In 7 Months Puts Rate Hike At Serious Risk

The Labor Department reported U.S. payrolls climbed by a seasonally adjusted 160,000 in April, the weakest monthly gain since September. The unemployment rate held steady at 5 percent, but the jobs report was certainly on the weak side.

What does the sluggish report it mean for the stock market and the economy?

“One gets the sense that the domestic discontent that has manifested itself during the past several months is in the process of causing firms to pause on capital expenditures and now hiring,” RSM Chief Economist Joe Brusuelas told Benzinga.

Related Link: SEC To Wall Street: No More Non-GAAP Accounting... For Real This Time

“This evolving economic environment has likely put any idea of a June rate hike by the Federal Reserve off the table.”

Allianz Chief Economic Adviser Mohamed El-Erian agrees that a potential rate hike is now at serious risk.

“The below-consensus monthly employment creation of 160,000 and the downward revisions of 19,000 to prior estimates are offset by a pickup in wage growth and lower long-term unemployment,” El-Erian told Benzinga.

“Given this tug of war, the markets could well revisit their initial reaction of sharply reducing the probability of a 2016 interest rate hike by the Federal Reserve.”

The SPDR S&P 500 ETF Trust (NYSE: SPY) opened Friday’s session down about 0.3 percent.

Disclosure: the author holds no position in the stocks mentioned.

Posted-In: Joe BrusuelasAnalyst Color News Econ #s Economics Federal Reserve Exclusives Analyst Ratings Best of Benzinga


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