Recession fears mount

Stock market plunges to new lows

Federal Reserve Chair Jerome Powell has pledged to do whatever it takes to curb inflation, now raging at a four-decade high and defying the Fed’s efforts so far to tame it. Increasingly, it seems, doing so might require the one painful thing the Fed has sought to avoid: A recession.

A worse-than-expected inflation report for May — consumer prices rocketed up 8.6% from a year earlier, the biggest jump since 1981 — helped spur the Fed to raise its benchmark interest rate by three-quarters of point Wednesday. Not since 1994 has the central bank raised its key rate by that much all at once. And until Friday’s nasty inflation report, traders and economists had expected a rate hike of just half a percentage point Wednesday. What’s more, several more hikes are coming.

The “soft landing” the Fed has hoped to achieve — slowing inflation to its 2% goal without derailing the economy — is becoming both trickier and riskier than Powell had bargained for. Each rate hike means higher borrowing costs for consumers and businesses. And each time would-be borrowers find loan rates prohibitively expensive, the resulting drop in spending weakens confidence, job growth and overall economic vigor.

U.S. economy slows sharply during omicron wave

Record spread of new coronavirus strain exacerbates labor and supply shortages

The U.S. economy dropped down to a slower gear in January amid a record outbreak of coronavirus cases that intensified labor and supply shortages, according to pair of IHS Markit surveys of senior business executives. A “flash” index of service-oriented companies tumbled to an 18-month low of 50.9 from 57.6 in the final month of 2021, IHS Markit said. A similar gauge of manufacturers dropped to 55 from 57.7 in December — a 15-month low. The flash IHS surveys give the first clear indication of the damage done to the U.S. economy in the first month of the new year.

Any reading above 50 means businesses are growing and numbers above 55% are quite healthy. Yet conditions aren’t as good as they were last fall, no thanks to the latest strain of the coronavirus. “Labor shortages, employee absences and the omicron wave reportedly weighed on growth,” IHS Markit said.

April jobs: ‘monster US payroll number’

Recovery charges ahead

The U.S. economy likely brought back the most jobs since August last month, with payrolls jumping by 1 million and the unemployment rate improving to a new pandemic-era low as more businesses reopen. The Labor Department is set to release the April jobs report Friday morning at 8:30 a.m. ET. Here are the expected main results, according to consensus data compiled by Bloomberg.

Non-farm payrolls are expected to rise for a fourth straight month and at an accelerating clip, with easing social distancing standards across the country helping support the recovery. Every economist polled by Bloomberg predicted a strong increase in payrolls: On the high end, Jefferies economist Aneta Markowska estimated a surge of 2.1 million payrolls for April, while Prestige Economics’ Jason Schenker penciled in payroll gains of 700,000 on the low end.

But on average, economists are expecting a blowout payrolls number of at least 1 million. Nomura chief economist Lewis Alexander said market participants should brace for a “monster U.S. payroll number” this week, driven in large part by advances in some of the industries hardest-hit by the pandemic. Leisure and hospitality payrolls are still down by 3.3 million compared to February 2020 levels, but have been making some of the largest gains over the past several months to try and lessen this deficit.

S&P, Dow surge to record highs after strong jobs report

The U.S. economy added 916,000 jobs in March

U.S. equity markets raced to all-time highs Monday as traders celebrated the stronger-than-expected March jobs report. The Dow Jones Industrial Average climbed 372 points, or 1.12%, while the S&P 500 and the Nasdaq Composite advanced 1.44% and 1.67%, respectively. The gains ran both the Dow and the S&P 500 to fresh record highs.

The U.S. economy added 916,000 jobs in March as the service sector continued to see growth amid the reopening of the economy, the Labor Department said Friday. Additionally, the unemployment rate fell to 6%, the lowest since the onset of the COVID-19 pandemic. Markets were closed on Friday in observance of Good Friday.

Looking at stocks, Alphabet Inc.’s Google unit scored a major victory over Oracle Corp. in a copyright dispute after the U.S. Supreme Court overturned a lower court’s ruling, finding that the former’s use of the latter’s software code in its Android operating system constituted fair use. The ruling means Google will not have to pay potentially as much as $30 billion in damages, Reuters reported, citing two people with knowledge of the situation.