Good News Need Not Always Be Bad News for Markets
A job and resource fair hosted by the Mountain Area Workforce Development Board in partnership with NCWorks took place in Hendersonville, North Carolina, on Tuesday, November 19, 2024. The event highlights the strength of the current labor market in the United States.
What You Need to Know Today
The U.S. nonfarm payrolls surged by 256,000 in December 2024, a jump from 212,000 in November and significantly higher than the Dow Jones forecast of 155,000. At the same time, the unemployment rate fell slightly to 4.1% from 4.2% in November. Analysts had anticipated the rate would remain flat.
Despite this strong labor report, U.S. stock markets declined. All major U.S. indexes turned negative for 2025. The pan-European Stoxx 600 index also dropped by 0.84%, closing with losses across all major markets. Eurozone government bond yields surged to multi-month highs in response to the report.
Meta Platforms announced it would drop third-party fact-checking, which some see as an attempt to align with U.S. President-elect Donald Trump’s administration. Former Facebook executives described this move as “bending the knee to Trump.” In a separate development, Meta CEO Mark Zuckerberg appeared on the Joe Rogan Experience, where he criticized Apple for lacking innovation.
Meanwhile, Apple’s market share in China continues to decline. Shares fell 2.4% after analyst Ming-Chi Kuo reported a 10%-12% year-on-year drop in iPhone shipments during December. He also stated that Apple Intelligence is not significantly boosting hardware upgrades or service revenue.
In the U.S., the future of TikTok remains uncertain. On Friday, the U.S. Supreme Court heard oral arguments about whether TikTok violates national security or free speech rights. The outcome could lead to TikTok being banned from U.S. app stores within days.
Looking ahead, investors are focused on the upcoming U.S. Consumer Price Index report due Wednesday. This will provide insights into ongoing inflation concerns. Additionally, major banks including JPMorgan Chase, Goldman Sachs, and Morgan Stanley are set to release their earnings later in the week.
The Bottom Line
The addition of 256,000 jobs in December exceeded expectations by over 100,000. While this might seem like good news, markets reacted negatively due to fears that the Federal Reserve might delay or reduce interest rate cuts. The CME FedWatch tool now indicates a 68.5% probability of just one rate cut this year.
Bond yields surged further. The 10-year U.S. Treasury yield reached its highest point since November 2023 following the report. As a result, the S&P 500 dropped by 1.54%, the Dow Jones fell 1.63%, and the Nasdaq lost 1.63%, marking a downturn across all major indexes in 2025.
Though “good news is bad news” has often been the mantra during inflationary periods, the Federal Reserve’s stance may be evolving. In fact, strong labor growth could now be interpreted as a sign of economic resilience. According to Chicago Fed President Austan Goolsbee, inflation over the past six months has averaged just 1.9%, slightly below the Fed’s target of 2%.
He added, “You’re never going to hear me complain that we got 250,000 jobs.”
With inflation more contained than in the past, strong employment numbers could point toward a healthy economy rather than overheating. As Adam Turnquist, chief technical strategist at LPL Financial, put it, long-term market performance depends more on sustained earnings and recession risk than on short-term selloffs.
So perhaps, in this climate, good news can just be good news—if investors take a longer-term view.
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Frequently Asked Questions (FAQs)
Q1: Why did markets fall even though job numbers were strong?
Markets reacted to the fear that strong job growth could delay interest rate cuts by the Federal Reserve, keeping borrowing costs higher for longer.
Q2: Is a strong job market always bad for investors?
Not necessarily. In periods of low inflation, strong employment can signal economic stability and consumer confidence, which are positive for long-term investments.
Q3: How does job growth affect bond yields?
Better-than-expected job numbers can cause bond yields to rise due to expectations of tighter monetary policy.
Q4: What is the Federal Reserve’s current inflation target?
The Fed aims for an inflation rate of around 2%. Recent reports show inflation has been around 1.9% over the past six months.
Q5: Could the TikTok ban really happen this week?
Yes, depending on the Supreme Court’s decision, TikTok may be removed from app stores in the U.S. within a matter of days.
Q6: How is Apple performing in China?
Apple’s iPhone shipments in China dropped by 10%-12% in December year-over-year, raising concerns about its performance in the region.
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