"Fed Chair Jerome Powell's divisivecut last week, the Fed's third cut in as many meetings, was based on consistent data showing a softening job market, including unemployment rising three months in a row through September, and the private sector shedding 32,000 jobs last month, per ADP's November report. According to Powell, the quarter-point cut was defensive and a way to prevent the labor market from tumbling,"
"He added that monthly jobs data may have been overcounted by about 60,000 as a result of data collection errors, and that payroll gains may actually be stagnant or even negative. "I think a world where job creation is negative...we need to watch that very carefully," Powell said at the press conference directly following the announcement of the rate cut."
""We are now firmly back in a good is bad/bad is good regime," Michael Wilson, chief U.S. equity strategist and chief investment officer for Morgan Stanley, wrote in a note to investors on Monday. A moderately cooling labor market could increase the likelihood of more rate cuts by the Federal Reserve-a tantalizing prospect for many investors eying future earnings growth-fueling bullish behaviors in the stock market, according to Morgan Stanley analysts."
Wall Street may welcome weaker-than-expected November jobs data because a moderately cooling labor market would raise the probability of additional Federal Reserve rate cuts and support equity valuations. Fed Chair Jerome Powell enacted a quarter-point cut, his third consecutive meeting cut, citing softening labor-market signals including three months of rising unemployment and ADP's report of the private sector shedding 32,000 jobs. Powell described the cut as defensive, noted inflation near 2.8% and warned that payrolls may have been overcounted by about 60,000. He emphasized vigilance if job creation turns negative. The Labor Department will release combined October–November payrolls, with November expected to show about a 50,000 gain.
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