New Arguments in Favor of the "Hawks": Strong Employment Data Pushed the Dow Jones Down

All three major U.S. stock indices, although they opened in different directions, moved into the “red zone” 15 minutes after trading began on September 4. Investors are assessing U.S. labor market data that significantly exceeded economists’ forecasts and now leaves the Fed with less reason not to raise rates in September, according to CNBC.

For example, the Dow Jones Industrial Average fell 0.3% during Friday’s trading session, the S&P 500 dipped by a marginal 0.09%, and the Nasdaq Composite—the only one to open slightly higher—later also slipped into negative territory, down 0.1%.

“Today’s data [on U.S. employment] adds weight to the ‘hawkish’ camp [at the Fed], but it still falls a bit short of providing clear justification for a rate hike on September 16,” said Vail Hartman of BMO Capital Markets (as quoted by Bloomberg).

Even a strong labor market report is unlikely to change the Fed’s plans, especially given Warsh’s preferences in interpreting the data, said U.S. Bank strategist Rob Haworth, as reported by Barron’s. “Paradoxical as it may seem, if the Fed raises rates in September or later... I think the market will view it positively—as a sign that the Fed won’t let inflation get out of control,” speculated Andy Goldberg, a strategist at Nomura Asset Management.

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