It’s really not as simple as saying good news on the economy was treated as bad news on Wall Street.
Yes, the S&P 500 shed 1.5% Friday, after December payroll growth of 256,000 was 100,000 above forecasts and the unemployment rate fell a tick to 4.1%. But the mini-market tantrum is less about disliking prosperity than worrying it might not be sustainable given the way bond yields and the Federal Reserve are acting in response.
What the market knows is that the economic data released early in each year since the pandemic has come in hot, only to moderate and sometimes give way to a “growth scare” months later.
What the market fears is that the bond market and Federal Reserve will extrapolate the strong jobs numbers and tighten financial conditions more than important parts of the economy (housing and manufacturing) can tolerate.
What the market is unsure about is how the impending policy mix of tariffs, immigration restrictions and deregulation will alter this interplay of rates, inflation, GDP growth and risk appetites.
It has taken the markets to a slightly vexing crossroads, where typical mid-cycle apprehension about an expansion’s durability intersects with aggressive market pricing of future growth and an unsettled policy setup.
With it all, though, stocks simply tested the floor of their post-election range, the S&P 500 now having spent the majority of the past 15 trading sessions within the range it traveled on Nov. 6, the day after Donald Trump’s win.
Source: https://www.cnbc.com/2025/01/11/behind-the-stock-sell-off-and-whether-the-bull-market-is-at-risk.html