Jobs Report Ignites Rate Hike Fears on Wall Street

Wall Street experienced wild swings this week due to a combination of factors, including a bond sell-off caused by tensions between the US and Iran, as well as a hotter-than-expected jobs report. The Dow Jones Industrial Average closed out the week down 146 points, while the S&P 500 gained seven points and the Nasdaq added 104 points.

The jobs report showed that the US economy added 162,000 jobs last month, triple what most analysts had forecast. This has given more ammunition to interest rate hawks at the Federal Reserve, which meets next month. Prior to the jobs report, many economists predicted the Fed would hold the federal funds rate at 3.5% to 3.75%.

However, with a hot jobs report, the Fed will now focus more on inflation data, which has been creeping upward in recent months. Stephen Brown, chief North America economist at Capital Economics, noted that even the most committed dove would struggle to find anything in the August employment report to justify keeping interest rates unchanged.

President Donald Trump called for lower interest rates, stating that the US should have the lowest rate of any country in the world. However, this is unlikely to happen given the threat of inflation, energy price spikes, and supply-chain problems.