Jobs data, Fed minutes, and a fresh start for investors: What to know this week
The December jobs report and details from the Federal Reserve’s last policy meeting of 2022 will headline a short opening week of 2023 for investors as Wall Street limps into a new year after its worst run since the Global Financial Crisis.
U.S. stock and bond markets will be closed on Monday, January 2, in observance of New Year’s Day.
Economic data will pick up when traders return to a four-day trading week after a quiet end of December.
The Labor Department will publish its jobs report for December at 8:30 a.m. ET Friday morning, and economists expect a payroll gain of 200,000 jobs last month, per Bloomberg consensus estimates.
Outside of the headline jobs data, three additional updates on the labor market will be on the docket for investors this week, with the latest Job Openings and Labor Turnover Survey (or JOLTS report), ADP’s private payrolls data, and the Challenger Job Cuts report all due out.
Alongside the flurry of labor market releases, the Fed will release a readout of its December policy meeting, which investors will pore over for clues on the central bank's next move. Last month, the Fed raised interest rates by 50 basis points, bringing total increases to its benchmark policy rate to 4.25% in 2022.
Global and U.S. stocks closed out their worst year since 2008 on Friday. Aggressive central bank actions to quell historic inflation and war in Ukraine battered financial markets and ended a three-year winning streak for the major averages.
The S&P 500 tumbled 19.4% in 2022, its largest calendar-year decline since a 38% drop in 2008 during the Great Recession. The Dow fell a comparably modest 9%, holding up better than its index peers.
The Nasdaq Composite wiped out one third of its value, dropping 33% and closing out its first four-quarter decline since the 2000 dot-com bubble as rising interest rates wreaked havoc on technology stocks.
Even as investors turn the page on 2022, much of Wall Street expects more pain remains ahead.
Consensus strategist forecasts see a volatile first half of 2023 and an easier second half. Still, stocks are expected to be little changed — or post marginal gains at best — with the Federal Reserve projected to keep rates high for a sustained period of time.
"Amid the backdrop of the hawkish Fed’s aggressive rate-rising moves leading into 2023, there is an exceedingly greater investor concern about the likelihood of a harder-than-desired landing that would push the U.S. and global economies into a recession," AXS Investments CEO Greg Bassuk said in an emailed note.
"Investors remain hyper-focused on employment, labor and related economic data, as the ongoing strength of wages could hamper corporate profit margins and cripple earnings across industries and sectors."
