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Market’s Reaction On Fed’s Powell Speech & Jobs Report 

U.S. Stocks closed mixed on Friday, 2nd December 2022, well off its lows after a stronger than expected jobs report. The nonfarm payrolls increased by 263,000 (200,000 exp) in November, after an upwardly revised 284,000 gains in October, a Labor Department report showed Friday.  

The unemployment rate held at 3.7% as participation eased, while the average hourly earnings rose twice as much as forecast after an upward revision to the prior month.  

The market’s first reaction was to sell on the number but later recovered maybe on the back of Chairman Powell’s comments earlier in the week of slowing down the pace of hikes or the fact that the jobs market is strong enough to withstand higher interest rates. 

The S&P closed down 0.12%, the Nasdaq down 0.18%, and the Dow up 0.1%. 

For the week, the three major stock market indexes finished higher, with the Nasdaq rising 2.1%, the S&P 500 adding 1.1%, and the Dow Jones edging up by 0.2% 

Here are the closing levels on Friday,2nd December 2022:

 Last Change Change% 
Dow Jones 34,429.88. +34.87.    +0.10% 
S&P 500 4,071.70. -4.87. -0.12% 
Nasdaq Comp 11,461.5 -20.95.  -0.18% 
US 10Y 3.49%   
VIX 19.06 -0.78 -3.93% 

If you have some time, do help yourself with these articles: – 

This Stock Strategist Says We’ll See 5% Inflation for the Next Decade 

Larry Summers Says Fed Will Need to Boost Rates More Than Markets Expect 

One Massive Trade Likely Fueled $1.5 Billion Flood Into Bond ETF 

Friday’s market moves tell us that the bulls refuse to give up. They are hanging on to anything positive. Whether it’s Powell’s comments or inflation data or jobs report. 

Even with many analysts in print and media sounding warnings, the selective nature of bulls to focus on the positives are what I believe to be the reason we have not made new lows.  

Maybe we have even made a bottom. 

It could also be the way the bond markets moved that gave the bulls some confidence to keep buying.  

After reading the report I linked above, about the massive inflows into bond ETF specifically from one large fund, it could entice others to follow OR, it could mean that a reversal is due as it was mainly influenced by just one buyer. 

As it stands at the moment, it would be difficult to see any kind of major selloff after withstanding all the bad factors thrown at the market so far. However, it’s always good to be cautious. 

Source: CBOE, Bloomberg 

This commentary is written by James Gomes
James has been in the finance industry for over 30 years and most recently worked for a large U.S. bank for more than 20 years.

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