Tech stocks manage modest rally after lackluster US jobs report

DMCA / Correction Notice
- Advertisement -

The relationship between economic news and the value of technology stocks has been a fun puzzle in recent months.

- Advertisement -

You might think that a strong jobs report, for example, would lead to general economic optimism and, therefore, an upward momentum for technology stocks. And you can also expect that poor economic data will lead to general economic pessimism, and hence a downward movement for technology stocks. You know, because technology is a huge part of today’s economy.

Ha, no. Well, partially yes, but also no.


going in today job reportA ghost was hovering over the markets. Namely, the US Federal Reserve, which would Start tightening monetary policy this year, perhaps through the end of its bond-buying program, through cuts to its balance sheet and raising rates. The result of the Fed’s tighter rates is that bonds and other low-risk assets will become more attractive. Also, given the risk-adjusted return growth, rising rates are expected to make expensive tech stocks less attractive.

Given that dynamic, you might expect that a strong jobs report today would mean tech stocks would decline, and a lackluster jobs report would mean tech stocks would rise. It almost happened. Today’s December jobs data missed (199,000 net new jobs reported, nearly half expectations) and tech stocks in the beginning sold. But then when the markets opened, they’re up 0.34% with the Nasdaq — while the Dow Jones Industrial Average is down a fraction — and software stocks are up about 0.8%.

- Advertisement -

Why Tech Stock Price Falls and Then Bounces?

there is worry that We have effectively reached full employment, Which could mean that December’s job losses were driven not solely by a lack of employer demand, but in part by a lack of worker supply. (the fact that We remain in this dynamic a global pandemic plays, Of course

Then, we find ourselves in an awkward position when a poor jobs report may indicate that the economy is stronger (closer to full employment) than anticipated, meaning wages and prices will continue to rise, prompting the Fed to raise rates. will be inspired to. As mentioned above, this would mean that high-risk assets would sell off and low-risk assets would become more attractive. And yet tech stocks are a touch higher, because, it appears, markets are deciding whether a bad-ish report will be positive for tech stocks, which have sold out sharply in recent weeks. Or that a weak jobs report will prove less Fed-provoking than a strong jobs report, in short.

So, today tech stocks are high and everyone working in the industry gets a little money.

- Advertisement -

Stay on top - Get the daily news in your inbox

Recent Articles

Related Stories