Strong Jobs Data is NOT Good for the Stock Market?

Tom Gentile

Posted in
Big Picture

By: Tom Gentile
January 5th, 2023

2 mins read

One would think people getting jobs and wages increasing would be a good thing for the economy, since it shows people are working, which could spur on consumer confidence with people willing to pay more for goods and services because they have a job to back up those purchases with income from that job continuing to come in.

So why did the market go down 300 points or so today on stronger than expected ADP private payrolls data?

The data showed employers added 235,000 jobs in December along with wages also increasing.  A bit later jobless came in lighter than expected.  All this points to the labor market remaining hot.

A Hot Labor Market

When unemployment is low that means more folks are back to work, sure, but then we have the risk of inflation, which is where goods and services are rising in cost or all the while the value of money is decreasing:  look at the chart on my weekly newsletter of the UUP, (my representation of the US Dollar).

We are 40-yr highs for inflation and the US Dollar has been in decline for months.

With more jobs being created as inflation continues to grow and with the US dollar declining prices on goods and services increase due to a ) supply and demand and b) so companies can bring in revenue to offset the extra wages they have to pay these new workers, whose compensation potentially cuts in to their bottom-line profitability. 

To combat a hot labor market and to try and cool down job and wage growth, the central bank, the Fed, will keep raising interest rates to stave off inflation; so much so they risk pushing our economy into a recession.

Non-farm Payroll Report Friday January 6

Economists estimate that U.S. employers added around 200,000 jobs in December.  That would show a moderate slowdown from gains the prior month.

If we get a higher number that would be deemed further bad news and signal to the Fed that the labor market is still strong. Also, investors don’t want to see gains in wage growth, because this could bring about even higher inflation.

App: Toms Option Tools

Toms Option Tools scan the markets for bullish and bearish trade opportunities using our proprietary scans and strategy algorithms. TTR Darknet finds bullish entries based on triple stack channel collisions. Money Calendar identifies seasonal patterns with at least 90% accuracy looking back 10 years. Weekly Cash Clock finds short term opportunities that last a week on average. Microcurrency Trader applies Darknet technology and moving averages to cryptocurrencies. Velocity Trader utilizes volume spike and Velocity indicators on custom stock lists. Quantum Scripts scans the markets for momentum acceleration signals and employs Quantum noise filters. Optimal Trader finds directional pre-earnings opportunities that are optimized for entry date, stock movement, and volatility surge. My Trades tracks the profit/loss of your trades, displays stock charts and risk graphs, creates new trades, and edits existing trades. Morning Report provides top 10 option rankings in 6 categories each day.


Disclaimers

Stock and options trading has large potential rewards, but also large potential risk.

You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.

This is neither an offer to buy/sell/ or recommend a particular stock or option.

Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been actually executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with hindsight.

No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

Disclaimer of Warranties and Liabilities Tom Gentile and TomsTradingRoom, LLC including employees, consultants, and editors (“Publisher”) cannot and do not warrant the completeness or accuracy of the content found in our areas, or its usefulness for any particular purpose.

Tom Gentile and TomsTradingRoom, LLC also make no promises that our content or the service itself will be delivered to you uninterrupted, timely, secure, or error-free. Under no circumstances will Tom Gentile and TomsTradingRoom, LLC be liable for direct, indirect, incidental, or any other type of damages resulting from your use or downloading of any content on our site.

This includes, but is in no way limited to, loss or injury caused in whole or in part by our negligence or by anything beyond our control in creating or delivering any portion of Tom Gentile and TomsTradingRoom, LLC.

You are agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that Tom Gentile and TomsTradingRoom, LLC will not be liable for any I, investment decision made, or action taken by you, or others based upon reliance on news, information, or any other material published by Tom Gentile and TomsTradingRoom, LLC.

Tom Gentile and TomsTradingRoom, LLC relies on various sources of information that we believe to be accurate and reliable. However, we make no claims or representations as to the accuracy, completeness, or truth of any material contained on our site.

Tom Gentile and TomsTradingRoom, LLC are educational portals, providing content for educational and informational purposes only. Neither Tom Gentile nor TomsTradingRoom, LLC are a broker/dealer. Investors need a broker to trade stocks and options and must meet certain requirements. All securities, futures, and investments data and ideas are offered to self-directed investors. All prices in USD unless noted otherwise.

A full disclaimer can be found here:  http://www.tomgentile.com/legal_disclaimers.html.

Sign Up Now for Free Education!