Dow, S&P 500, Nasdaq rise after jobs surprise with CPI on deck

Bank of America economists wrote in a client note on Thursday that Wednesday’s unexpectedly bullish jobs report completely eliminates the possibility of a rate cut under current Federal Reserve Chairman Jerome Powell and narrows the path to cuts under the Fed led by Kevin Warsh, calling the report “a feast for the hawks.”

Data released Wednesday by the Bureau of Labor Statistics shows that the U.S. 130,000 new jobs added in JanuaryThat doubled economists’ expectations of 65,000. The unemployment rate also fell from 4.4% to 4.3%, exceeding expectations that the rate would remain stable.

The data strengthened the claim that the labor market remained resilient despite inflation remaining high. It is thought that these conditions will reduce the possibility of interest rate cuts in the near future.

“Payrolls increased above all expectations, downward revisions were minimal, and wages and hours also increased,” the analysts wrote. “The broad-based strength in the January jobs report confirms our view that the Fed will not cut rates under Powell.”

Economists wrote that for now, BofA continues to predict two interest rate cuts under the Fed administration led by Warsh. But they wrote that the swing measure for potential interest rate cuts under Warsh would be the unemployment rate.

“The main risk of calling for significant cuts is a decline in interest rates. So the path to cuts now looks narrower under Warsh (which we think the economy doesn’t need),” BofA economists wrote.

“If the U-rate remains stable or falls further through June, Warsh may remain on hold for the rest of the year.”