Last Friday, the government posted a strong jobs report that the stock market did not expect. This has Wall Street pros scared. Strategists who expected the Federal Reserve to hold further rate cuts are more confident on the call.
Bank of America’s U.S. economist, Aditya Bhave, noted that investors need to watch out for an interest rate hike. This would slow the economy. In response to the risk, Bank of America (BAC) stock fell by 2.38%. Wells Fargo (WFC), Goldman Sachs (GS), and JP Morgan Chase (JPM) shares also fell on the day.
The Fed will scrutinize the Personal Consumption Expenditure data. This measures inflation excluding volatile items like food and energy. If the PCE spikes higher, the Fed may raise rates by at least 25 bps ahead.
Tariffs are also on the minds of consumers and the Fed. Trump started with the threat of a 25% tariff. Canada (EWC) and Mexico (EWW) markets are trading lower in response. The two trade partners will likely issue retaliatory tariffs that match those imposed by the U.S.
Oil stocks started to show signs of life. Exxon Mobil (XOM) lost 12.74% in the last quarter, while Conoco Phillips (COP) gained 1.84% in the last week. The hot U.S. economy increases energy demand, which increases oil prices.
