Upcoming Economic Data to Shed Light on Inflation, Market Resilience
US investors, shaken by the recent tech sell-off, will scrutinize upcoming employment figures for evidence of sustained economic growth, which could intensify inflationary concerns.
The January nonfarm payrolls report, due next week, will indicate the health of the labor market amidst elevated interest rates. Despite the Fed maintaining unchanged rates, inflation remains above its 2% target, leading to fears of overheating.
The report will assess whether the labor market's strength is contributing to higher prices in the service industry. "The employment report will determine if we have a robust labor market without inflationary pressures," notes Tony Rodriguez, Nuveen's fixed income strategy chief.
Following the AI-fueled stock sell-off earlier this week, optimism about the US economy has waned. "Investors are grappling with conflicting data, from AI developments to Trump policies and Fed meetings," says Nationwide's chief market strategist, Mark Hackett.
Earnings reports from Alphabet and Amazon are anticipated next week, following mixed results from other tech giants.
Economic policy uncertainty under the Trump administration, particularly potential trade tariffs, remains a source of investor anxiety. "Uncertainty makes market participants increasingly attentive to economic data," explains Byron Anderson, Laffer Tengler Investments' fixed income head.
As markets struggle to form a long-term outlook, upcoming data points will take center stage.