Stock markets have been under a little pressure on Friday, and the US is poised to open in the red also, with the Nasdaq 100 hit particularly hard.
This comes on the back of some disappointing earnings from heavyweight tech firms Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Alphabet (NASDAQ:GOOGL). Each had their own reasons for disappointing the street, but ultimately the one thing they all have in common is the economy and the outlook, and it’s hitting both the top and bottom lines.
Whether that’s through fewer device purchases or lower spending on the cloud and advertising, the trend is extremely clear for all to see. Many of the big tech firms have responded by tightening the purse strings and announcing mass layoffs, but more is needed to win over Wall Street.
Jobs report could offer further respite
Of course, another common factor in all of this is inflation and interest rates, which brings us nicely back to the economic data. Today's US jobs report could ease the pressure on big tech if we see a friendly report consisting of more modest wage growth, lower job growth, and higher participation.
A soft landing, while still doable, can’t be achieved without seeing more slack in the labor market, and that will likely necessitate both higher participation and a slight increase in the unemployment rate, both of which should address the wage issue and prevent a price spiral. It’s a fine balancing act, and it’s about time we see some evidence of it happening, or confidence in the terminal rate being here or near will fade.
Could the jobs report spark a reversal?
Bitcoin continues to hold on impressively to new year gains, but it goes without saying the momentum has fallen away, culminating in yesterday’s sharp reversal off its most recent high. It looks primed for a correction, although that momentum could return if we see some positive headlines or an improvement in risk appetite. Once more, we find ourselves looking to the jobs report on both counts. A disappointing report could see the correction take hold.