Feb 2, 2018

Dow sinks 665 points in biggest drop since Brexit vote

Major U.S. stocks plummeted Friday, with the Dow sinking 665 points, amid signs that strong wage growth may lead to increased interest rates and inflation.

Why it matters: Today was the worst day for stocks since June 2016, after the Brexit vote in Britain. The plunge could signal that the equity markets had overheated after a remarkable 14 months sparked by booming consumer confidence and the promise of a major tax cut after Donald Trump was elected.

The numbers, per CNBC:

  • The Dow dropped 665 points (more than 2%), bringing the 30-stock index below 26,000.
  • The S&P 500 fell 1.8%, with energy stocks performing the worst.
  • The Nasdaq sunk 1.5%.

Driving the drop: Earlier today the Labor Department reported that the U.S. added 200,000 new jobs to the economy, while the unemployment rate stayed at 4.1%. The report also showed that hourly wages grew 2.9% in the last 12 months, the fastest pace in a decade — spurring concerns over inflation.

Between the lines: All this sets the stage for the Federal Reserve to increase interest rates.

"The key for the market today is rising interest rates. The old adage is: 'Bull markets don't die of old age, they are killed by higher interest rates.' That looms large."
— Mike Baele, managing director at U.S. Bank Wealth Management, to CNBC.

Go deeper

Wages for typical workers are rising at their fastest rate in a decade

Construction workers holding a rally in the Bronx. Photo: Erik McGregor/LightRocket via Getty Images

Wages for nonsupervisory employees — who make up 82% of the workforce — are rising at the fastest rate in more than a decade, the Wall Street Journal reports.

Why it matters: It indicates that the benefits of a tightening labor market and a time of historically low unemployment rates are finally being passed along to most workers.

Go deeperArrowDec 27, 2019

U.S. economy adds 145,000 jobs in final report of 2019

Data: Bureau of Labor Statistics; Chart: Axios Visuals

The U.S. economy added 145,000 jobs in December, the government said on Friday, below economists’ expectations of 160,000. The unemployment rate held at 3.5% — a 50-year low — while wages grew 2.9% from a year earlier, the smallest gain since July 2018.

Why it matters: The U.S. job market held up in the final month of 2019, but heads into the election year with a slowing pace of job creation and wage growth.

Go deeperArrowJan 10, 2020

Eurozone producer prices sink again

Data: FactSet; Chart: Andrew Witherspoon/Axios

The continued decline in prices paid by manufacturers could be a major impediment to European policymakers' desire for higher inflation in the eurozone, and data released Monday shows things are not improving.

What happened: The producer price index for the eurozone fell for the fourth straight month in November.

Go deeperArrowJan 7, 2020