Stocks refused to budge today despite the release of new labor market data. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all remained relatively unchanged by midday, following a mixed close in yesterday’s session.
The labor market showed further signs of deceleration, as evidenced by the ADP report on private payrolls, which fell short of expectations. The report indicated an addition of 103,000 jobs in November, a figure revised down from the initially reported 113,000 in October to 106,000. This was below the 130,000 job increase forecasted by economists surveyed by Reuters.
The ADP report, developed in collaboration with the Stanford Digital Economy Lab, precedes the Labor Department’s more comprehensive employment report for November, set to be released on Friday. Historically, the ADP report has had a mixed track record in accurately predicting the private payrolls count in the official employment data. For instance, the last two ADP reports have reported lower figures than those in the Bureau of Labor Statistics’ (BLS) official employment data.
The labor market’s gradual slowdown follows the Federal Reserve’s cumulative interest rate hikes totaling 525 basis points since March 2022. Recent government data revealed a significant drop in job openings to a low not seen in over two and a half years, with only 1.34 vacancies available per unemployed person as of October – the lowest ratio since August 2021.
Economists anticipate that the BLS will report an increase of 153,000 jobs in private payrolls for November, partly due to the return of approximately 33,000 striking United Auto Workers union members. This is expected to contribute to a total nonfarm payroll increase of 180,000 for the month, following a 150,000 rise in the previous month.
The combination of a cooling labor market and diminishing inflation has led financial markets to speculate that the Fed’s cycle of monetary policy tightening might be concluding, with potential rate cuts as early as March next year. The Fed’s next rate decision, expected next Wednesday, is anticipated to maintain the current rate levels.
Despite these developments, there remains skepticism about the future of monetary policy, with some strategists suggesting that the market’s expectations for rate cuts in the next year, totaling at least 100 basis points, might be excessively optimistic. Treasury futures are currently pricing in 97.7% odds that the Fed will hold rates steady at the conclusion of its next meeting.
In the cryptocurrency market, Bitcoin (BTC-USD) experienced a brief surge past $44,000, driven by retail investor enthusiasm and expectations of rate cuts and the potential approval of spot Bitcoin ETFs. However, Bitcoin has since relinquished these gains, following its longest winning streak since May, which ended yesterday.
JPMorgan Chase CEO Jamie Dimon may have had something to do with it after expressing strong criticism towards Bitcoin and other cryptocurrencies during a Senate Banking Committee hearing. Responding to questions from Senator Elizabeth Warren (D-Mass.), Dimon voiced his longstanding opposition to the crypto sector. He stated, “I’ve always been deeply opposed to crypto, Bitcoin, et cetera,” highlighting his belief that the primary applications of these digital assets are for illicit activities such as criminal transactions, drug trafficking, money laundering, and tax evasion.
Dimon went as far as to suggest a drastic measure, saying, “If I was the government, I’d close it down.” This statement marks yet another instance of Dimon’s vocal disapproval of cryptocurrencies, despite his bank’s significant involvement in blockchain technology, which underpins the $1.6 trillion cryptocurrency industry.
Dimon has previously made headlines with his critical remarks about Bitcoin, once labeling it “a hyped-up fraud” and comparing it to a “pet rock,” although he later retracted the fraud comment. During the hearing, which was part of a routine examination of the banking industry, Dimon, along with other leading bank CEOs, concurred with Senator Warren that cryptocurrency companies should be subject to the same anti-money laundering regulations that govern major financial institutions.
Will this lead to further regulation? Maybe, maybe not. But the hype surrounding a yet-to-be-approved Bitcoin ETF should continue to override any regulation fears, no matter what Dimon or Warren have to say about it.
