Some folks on Wall Street think yesterday's U.S. jobs number was 'implausible' and is thus due for a correction | Fortune

"Investors seem to be buoyed by the strong job-market numbers published yesterday by the U.S. Bureau of Labor Statistics. With unemployment falling from 4.4% to 4.3%, many Wall Street analysts are saying that this means the U.S. Federal Reserve is now less likely to cut interest rates further. If the economy is doing just fine, there's no need to risk inflation by delivering yet more cheaper money, the theory goes."

"First, the number of jobs added in January-130,000-was roughly double analysts' expectations. Analysts aren't always right, of course. But it is interesting that the reported number was way out of line with economists' estimates. Second, the BLS revised downward the number of jobs it previously reported for 2024-2025. The real number was just 181,000, the agency said, and not the 584,000 it had estimated earlier. That suggests the January number may also be revised downward in the months to come."

"Right now, traders are choosing to believe the numbers. The highly reliable CME FedWatch index, which tracks bets on future rate-setting decisions by the Fed, shows a 92% chance of the Fed keeping rates at the 3.5% level in March, and a 78% chance of that hold continuing in April. Only in June does the chance of a cut hit 50%."

""The broad-based strength in the January jobs report vindicates our view that the Fed won't cut under [current Fed chairman] Powell," Shruti Mishra and her team at Bank of America advised in a note seen by Fortune. (Powell is due to leave office in May.)"

S&P 500 futures rose 0.32% after the index closed flat at 6,941. The U.S. Bureau of Labor Statistics reported unemployment fell from 4.4% to 4.3% and January payrolls increased by 130,000, roughly double expectations. The BLS revised prior 2024-2025 job totals down from an estimated 584,000 to 181,000, suggesting January's figure could be revised lower. Traders are largely accepting the published data, with the CME FedWatch showing a strong probability of the Fed holding rates at 3.5% through April and only a 50% chance of a cut by June. Analysts remain divided over accuracy and policy implications.

Read at Fortune