Stock Sell-Off Continues After Lower-Than-Expected November Job Growth—Five Experts on the Drop

Regis Duvignau | Reuters

The stock sell-off continued Friday as November job growth came in weaker than expected. Concerns over what the omicron variant could do to the global economy also weighed on markets.

Here's what five experts had to say about Friday's drop.

Liz Young, head of investment strategy at SoFi, digs beneath the surface of the jobs report and what it means for the Federal Reserve.

"I think there was a little bit of a mixed message here and it gives the Fed a little bit more to think about, and we're not necessarily positive that they're going to hike rates so quickly. So, I think the market is trying to work through those numbers, but the Fed is looking at the labor force participation rate and the unemployment rate and both of those came in positively, so I actually think that this gives the Fed room to say we're still going to taper faster. And rate hikes are certainly not out of the question summer and fall of next year.

David Kelly, chief global strategist at JPMorgan Asset Management, sees a "lot of momentum" in the release.

"What it says is there's lots of momentum in the labor market. The payroll survey, I think, gets messed up a little bit by seasonal factors. And we actually added 330,000 retail jobs ... The broad picture is we're running out of workers fast and wage growth is very strong, particularly for low-wage workers. So I see a lot of momentum here, more momentum on the demand side than the supply side. And I do tend to agree that this means the Fed probably tapers faster and hints earlier about raising rates than they were earlier doing."

Diane Swonk, chief economist at Grant Thornton, says the numbers were better than at first glance.

"The household survey and the payroll survey, the dissonance between them is deafening, and the reality is somewhere in between, which is much, much better. ... I think the Federal Reserve will embrace the fall in the unemployment rate and rise in the participation rate to the highest level since March of 2020. That is something they've been waiting to see, people participating. But also we saw, the details of this data suggested that leisure and hospitality wages actually fell during the month. I don't believe that for a second. And I think that gets into some of the seasonal problems… We actually are seeing wages in that sector pick up."

Jan Hatzius, chief economist at Goldman Sachs, discusses the seasonality of the November report.

"It's certainly a huge gap between the establishment survey, the payroll numbers, and the household survey, i.e., the unemployment rate with this four-tenths decline in the unemployment rate, 1.1 million increase in household employment. Normally, you would put a lot more weight on the establishment survey numbers because they're much less volatile from month to month. However, I think in this case, I would put a little bit more weight than normal on the household survey, partly because the numbers were so impressive in the household survey, and partly because there may be some questions around seasonal adjustment in general in such an unusual period as this one."

JoAnne Feeney, portfolio manager at Advisors Capital Management, shares her view on how the omicron variant could impact stocks and the economy.

"Two things have happened. Number one, we still don't have information on how severe illness this particular variant causes and how effective the vaccines will be. But what we seem to be learning now is that it is much more contagious. And so that widens the degree of uncertainty about the consequences of omicron. Because if it is more severe in terms of illness, that makes things a lot worse, and while we might not expect a lot of lockdowns, it will drive people to stay home more just voluntarily. On the other side, if it's more mild and it spreads more quickly, that actually would be a good thing. And so I think what we're seeing is folks take some risk off the table, and that's driving both bond prices up and it's driving particularly risky equities down. But it's not happening everywhere in tech. Tech is certainly feeling the brunt of it, but notice that there are some really solid tech names out there still like Broadcom, for example, Qualcomm holding up well, so you really have to pick and choose where you want to be exposed for your clients."


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