Slow Us Growth Pushes Stocks Lower
US indices opened flat Friday morning even as unemployment fell and payrolls rose.
Saturday, November 8, 2014 - 00:00
Some 214,000 jobs were added in October, slightly lower than expectations. As a result, the S&P 500 fell 0.1%, the Dow slid 0.2% and the Nasdaq dropped 0.1%.
Although the jobs number was lower than expected, economists still took it as a sign of slow-but-steady recovery. The US economy has created at least 200,000 jobs in each of the last nine months – a streak last reached in 1994. The unemployment rate inched down to 5.8%.
The slightly downward turn in US indices is not surprising given Thursday’s record finish on the back of midterm election afterglow and new stimulus suggested by European Central Bank President Mario Draghi.
Federal Reserve to stay patient with interest rate hike
US wages ticked up by 2% compared to this time last year, according to The Wall Street Journal. Economists hoped for an increase in wages.
“It was not a bad number but was a tad disappointing. The economy is moving in the right direction but just not at a pace that would bring forward the timing for the Fed’s rate increase,’’ Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. in New York, told The Wall Street Journal.
Most experts predicted the Federal Reserve would wait until the third quarter of 2015 to raise interest rates. If the US economy shows faster growth or inflation increases, the Fed could move that rate hike to the beginning of next year.
When the Federal Reserve finally does enact a rate increase, it will be a nod to a healthy economy, which in turn would boost stock indices.
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