U.S. Hiring Slows but Remains Solid

Markets rise as investors like the look of hiring and wage trends.

Bad news may be good news when it comes to the health of the job market.

After fresh data showed that the number of jobs added to the economy was more than expected, the stock market rose.

The labor market data has been the focus of investors. The Federal Reserve tried last year to slow the economy by raising interest rates quickly.

Data at the end of the year suggested that inflation might have started to moderate. Competition for workers pushing wages higher and stoking inflation is a key piece of the puzzle. A strong labor market has been a problem for the Fed.

Ronald Temple, the chief market strategist at Lazard, said before the numbers were released that interest rates might have to go higher for longer than markets think.

The easing of wage growth was welcomed by stock investors on Friday because they wanted to see the end of the Fed's interest rate increases.

A shift in expectations on interest rates is one of the points made by Mr. Temple.

The two-year Treasury yield is sensitive to changes in Fed policy. A quarter-point increase in rates at the Fed's next meeting in February is a step down from December's half-point rise, which was already a drop from the jumbo three-quarter-point increases that came before. The key policy rate is set by the Federal Reserve.

The Fed has warned investors not to make assumptions about the end of the Fed's campaign against inflation before it happens. Falling inflation can lead to rising stock prices that can lead to inflation.

According to the minutes of the Federal Reserve's December meeting, an unwarranted easing in financial conditions, especially if driven by a misperception by the public of the committee's reaction function, would complicate the committee's efforts to restore price stability.

The possibility of a more severe economic downturn is raised by the Fed's determination to eradicate inflation.

With the record-low unemployment rate indicating that there is still so much work ahead of them, a hard landing looks to be the most likely outcome this year. The clock is about to run out.