'Eye-Popping For The Fed': 5 Experts React To November Jobs Report, What It Means For Interest Rates

Zinger Key Points
  • The U.S. added 263,000 jobs in November, beating average economist estimates of 200,000 jobs.
  • "The wage data is going to be eye-popping for the Fed," one market expert says.

The SPDR S&P 500 ETF Trust SPY traded lower Friday after the Labor Department reported strong U.S. jobs market numbers from November.

The U.S. added 263,000 jobs in November, beating average economist estimates of 200,000 jobs. The unemployment rate remained steady at 3.7%, in-line with economist expectations. Wages were up 5.1% year-over-year and increased 0.6% from October.

More Aggressive Fed? Robert Schein, chief investment officer at Blanke Schein Wealth Management, said the Federal Reserve can use the jobs data to justify more aggressive monetary policy measures in combating inflation.

"Friday's stronger-than-expected jobs report gives the Federal Reserve more reasons to continue raising interest rates and maintain tighter monetary policy for longer, at least until the labor market begins to weaken, which is a signal that the market does not want to hear right now," Schein said.

Peter Essele, head of portfolio management at Commonwealth Financial Network, said a jump in 10-year Treasury yields following the release is a sign investors are pricing in the possibility of a larger-than-expected interest rate hike in December.

"The release sets up the prospect for an aggressive hike of 75 basis points from the Fed later this month, as opposed to the 50 basis points that had been forecasted and expected by markets," Essele said.

Related Link: US Adds 263,000 Jobs In November As Labor Market Stays Hot Despite Fed Hikes

Quincy Krosby, chief global strategist at LPL Financial, said unexpectedly high wage growth suggests companies may continue to pass on rising labor costs to their customers by raising prices.

"The stronger than expected payroll report, particularly with average hourly earnings climbing higher, has the futures market in the red and Treasury yields inching higher as it is clear that despite the Fed's determination to curtail inflation, workers still have the upper hand with regard to wages," Krosby said.

Concerning Wage Growth: Cliff Hodge, chief investment officer at Cornerstone Wealth, said the jobs report is a reality check for investors anticipating a Fed pivot any time soon.

"While the headline payrolls number was strong, the wage data is going to be eye-popping for the Fed," Hodge said.

Related Link: Stocks Rip Higher After Powell Says Fed Could Dial Back Interest Rate Hikes 'As Soon As The December Meeting'

Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said the jobs report is another example of why the Fed may be battling inflation for much longer than many investors expect.

"Regardless of whether we continue the bear market rally into the end of this year, next year is likely to be a volatile one, as a weakening economy and tight financial conditions is our base case for the entire year," Zaccarelli said.

Market Movers: Here are some of Friday's biggest S&P 500 gainers and losers following the jobs report:

  • Carnival Corp CCL was down 4%.
  • Fortinet Inc FTNT was down 3.4%.
  • Aptiv PLC APTV was down 3.2%.
  • Solaredge Technologies Inc SEDG was up 6.4%.
  • Enphase Energy Inc ENPH was up 6.1%.
  • Huntington Ingalls Industries Inc HII was up 3.6%.

Read next: The Federal Reserve's Preferred Inflation Data Just Cooled And Risk Assets Are Flying: What's The Fed's Next Move?

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Posted In: Analyst ColorNewsEcon #sTop StoriesEconomicsFederal ReserveMarketsAnalyst RatingsBlanke Schein Wealth ManagementChris ZaccarelliCliff HodgeCommonwealth Financial NetworkIndependent Advisor AllianceInflationInterest RatesLPL FinancialPeter EsseleQuincy KrosbyRobert Schein
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