December jobs report has Wall Street starting to talk about rate hikes in 2025
Published On Jan 10, 2025, 3:35 PM
The recent December jobs report showed robust job growth, with 256,000 new jobs added, which has led some Wall Street strategists to anticipate possible interest rate hikes by the Federal Reserve as early as 2025. This contrasts with previous expectations of rate cuts. The unemployment rate has dropped slightly to 4.1%. There's increasing concern about inflation, which may push the Fed towards rate hikes if inflation metrics don't align with their goals. Hence, investors are advised to keep an eye on upcoming economic indicators related to inflation for better market strategies.
Stock Forecasts
SPY
Negative
Given the strong jobs report and concerns about rising inflation, the market may react negatively as investors adjust expectations regarding Fed monetary policy. Stocks are likely to remain volatile as the market digests the implication of these economic signals, favoring sectors sensitive to interest rates.
XLU
Negative
As investors anticipate potential interest rate hikes, sectors such as utilities and real estate, which tend to underperform in a rising interest rate environment, may also see downward pressure. Investors should consider reducing exposure to these sectors amidst inflation concerns and a possible shift in monetary policy.
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