Today’s jobless claims numbers were higher than expected, and a big jump from the previous week’s numbers, which had been the lowest since the spring. And that may be a clue about what the Federal Reserve does next. If unemployment rises and the jobs report shows growing weakness in the labor market, there is a chance that the Fed could ease up on how aggressively it raises interest rates to fight inflation. Ahead of the jobs report, the big rally in the U.S. stock market earlier this week has fizzled. You can expect volatility going forward in the markets as investors continue to look for clues as they weigh risks of a potential recession. So each piece of economic data could provide hope to fuel brief rallies—or fan the flames of discontent. Investors will also be paying attention to speeches and comments from central bank policymakers for hints about how aggressive they plan to be at the next Fed meeting. Hawkish tones (meaning wanting to raise rates) will likely send markets lower, while dovish comments (lowering rates) could soothe fears that the Fed is sending the U.S. economy into a recession.
