Stocks plunge on strong hiring

The Dow Jones Industrial Index, the most widely-watched stock market indicator, plunged by 278 points today, after the Labor Department’s February jobs report showed unexpectedly strong job creation, with nearly 300,000 workers hired last month. This plunge might be hard to comprehend especially if you are the kind of person who, when looking for stocks available for purchase (akcje do kupienia in Polish!), would rarely venture away from their preferred cryptocurrencies.

Why are investors reacting perversely to a strenghening economy? Simple. For 5 years now, ever since the stock market bottomed in March 2009 following America’s worst economic crisis since the 1930s, the stock market has been inflated by government intervention in financial markets by the Federal Reserve in the form of “quantitative easing” (QE), which ended last October (the stock market slid then, too) and “zero interest rate policy” (ZIRP), which will begin winding down when the Fed starts raising interest rates sometime this year. With this being said, the stock market is often pretty stable and consistent. Perhaps the market will be fine after this government intervention ends. Whilst this might put some people off the stock market, others will be encouraged to invest some money into stocks. To do this, people would just have to look for aplikacje giełdowe (stock exchange applications) that could help people to find reliable investments.

deflating-hot-air-balloonStrong hiring shrinks the pool of unemployed workers, putting upward pressure on wages, resulting in inflation, which steers Fed policy toward higher interest rates. Wall Street has been expecting for some time the Fed will gradually end its policy of keeping interest rates artificially low as the economy returns to normal, but with that time now approaching, some of the air pumped into stock prices is hissing out of the balloon.

That’s how capitalism works, folks. When the capitalists no longer get government largesse, the financial markets throw a hissy fit. Then the balloon returns to Mother Earth.

Your Comment