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The Market Wrap for May 11: Record Job Openings Signal Labor Market Strength

Asif Imtiaz May 11, 2018

Lack of economic data kept the market trading mostly sideways early in the week, but a slower rate of wholesale inflation and record high job openings swiftly changed the mood later in the week.

The U.S. is officially out of the Iran nuclear deal and that destabilized the oil market, pushing prices to nearly a four-year high. However, things are looking pretty rosy stateside as the JOLTS job openings figure just reached an all-time record high.

It also signaled that higher wages and greater inflation are on the way and that’s when the Fed will likely hike the rates to tame the market. So, expect major stock indices to trade sideways regardless of how loud the labor market roars in the coming weeks.

President Trump’s decision to get out of the Iran nuclear agreement might not cause as much havoc in the coming months, as other key allies of the U.S. will likely stick to the deal. Nonetheless, it caused a mild panic and if the Producer Price Index (PPI) data didn’t come weaker than expected, it could have caused a selloff during this week.

To conclude, inflation worries are still there and lower consumer spending could easily derail the retail sector despite a strong labor market. So, keep an eye on both the inflation situation and wage levels as these two economic metrics will prove to be very important in the short term.

Be sure to check out our previous week’s edition here, in which a tentative FOMC statement baffled investors.

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