⏳ Markets Tumbled 1.6% After 256K Jobs Added! What the Fed Won’t Tell You 🚀

Author

The Pragmatic Investor
January 12, 2025

In partnership with

A booming job market should be good for stocks, right? Wrong.

When the December 2024 jobs report dropped on January 10, 2025, I was sipping my morning coffee, expecting a lukewarm number—maybe 150,000 to 175,000 jobs added. After all, economic growth had been cooling down, and Wall Street had been banking on weaker data to justify early Fed rate cuts in 2025.

Instead, BAM! 256,000 jobs added. The unemployment rate dropped from 4.2% to 4.1%—another shocker. And just like that, the market tanked.

  • Dow Jones fell nearly 700 points (-1.6%)

  • S&P 500 sank 1.5%

  • Nasdaq dropped 1.6%

Wait, what? Shouldn’t a strong labor market mean economic strength and higher corporate earnings?

If you’re scratching your head, you’re not alone. But let me break it down for you.

The Fed Just Got a Problem They Didn’t Want

Here’s the thing: the stock market lives and breathes on interest rate expectations.

For months, Wall Street was pricing in multiple Fed rate cuts in 2025—some even whispering about a March cut. But a booming labor market throws a wrench in that narrative.

Why? Because strong employment = more people spending = inflation sticking around.

And guess what? The Fed doesn’t like that.

Bond markets instantly reacted:

  • The 10-year Treasury yield shot up to 4.76% (a 20-basis-point jump).

  • Fed rate cut bets shifted from March to possibly June or later.

  • Inflation fears resurfaced.

Translation? The cheap money party is NOT starting soon—and that spooked the stock market.

Tech Stocks Got Crushed—Again

High-growth stocks, especially in tech, got smoked.

  • Nvidia (NVDA) tumbled 4.2%

  • Tesla (TSLA) dropped 3.8%

  • Apple (AAPL) slid 2.6%

Why? Because tech thrives in a low-interest-rate environment. When rates are high (or aren’t coming down fast), borrowing is expensive, and valuations take a hit.

Plus, with bond yields rising, investors can suddenly earn 5% risk-free in Treasuries. Why take on high-volatility stocks when you can get guaranteed returns?

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Sectors That Survived the Selloff

Not all stocks got destroyed, though.

Some sectors actually gained ground:

  • Energy Stocks: Oil prices climbed as WTI crude surged to $82.50 per barrel, boosting ExxonMobil (XOM) +1.4% and Chevron (CVX) +1.2%.

  • Financials: Banks love higher rates because it boosts their profit margins. JPMorgan Chase (JPM) gained 0.9%, and Bank of America (BAC) rose 1.1%.

  • Defense & Industrials: With global tensions still high, Lockheed Martin (LMT) was up 0.8%, while Boeing (BA) gained 1.5%.

What This Means for Investors (And How to Play It)

  1. Forget March Rate Cuts—June is More Realistic

    • The Fed needs more proof that the economy is cooling down. Right now, the jobs report says the opposite.

    • If January and February jobs reports stay hot, expect even fewer rate cuts in 2025—maybe just two instead of four.

  2. Expect More Market Volatility

    • Investors hate uncertainty, and this jobs report just created a lot of it.

    • Sectors like tech could remain under pressure until we get clarity on Fed policy.

  3. Stock Picks for This Environment?

    • Dividend Stocks (Johnson & Johnson, Coca-Cola, Procter & Gamble)

    • Energy Stocks (ExxonMobil, Chevron)

    • Financials (JPMorgan, Goldman Sachs)

    • Bonds & Treasuries (yields are attractive at 4.5%-5%)

Final Thoughts

If you were hoping for Fed rate cuts to fuel a bull run, this jobs report just slapped that idea in the face.

Instead of blindly buying the dip, focus on strong businesses that perform well in higher-rate environments.

The 2024 bull run might take a breather, but that doesn’t mean opportunities aren’t out there.

Stay smart. Stay informed. And as always—keep your emotions in check when markets freak out.

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Disclaimer: The content on this blog is for educational and informational purposes only and is not intended as financial, investment, tax, or legal advice. Investing in the stock market involves risks, including the loss of principal. The views expressed here are solely those of the author and do not represent any company or organization. Readers should conduct their own research and due diligence before making any financial decisions. The author and publisher are not responsible for any losses or damages resulting from the use of this information.

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