Wall Street slumps despite strong US economic data
- U.S. labor market data showed strong job additions, with payrolls increasing by 256,000 in December.
- Market reactions included a drop in Wall Street indices and a decline in the pound's value against the dollar.
- These events have raised concerns about ongoing inflation and potential monetary policy tightening in 2025.
The global financial markets experienced a downturn following the release of the U.S. jobs data, which showed payrolls surging by 256,000 in December against an expected 164,000. This unexpected strength intensified concerns about persistent inflationary pressures. On Friday, January 10, 2025, Wall Street faced a significant sell-off, with the S&P 500 falling about 1.7% and the Dow Jones down 1.6% by the time European markets closed. The ripple effects were felt globally, with Asian and European markets also declining. Additionally, the pound slumped to a 13-month low against the dollar, as investors recalibrated expectations regarding potential interest rate cuts by the Federal Reserve in 2025. Amid these market dynamics, oil prices surged as the concerns over low gas inventory levels in the UK persisted, further complicating the economic landscape. The reaction highlights the fragility of global markets in the face of strong economic data that could imply a tightening of monetary policy.