The Hot Job Market, a financial relief, is a Wall Street concern

That hope is threatened as the Federal Reserve continues with a plan to increase borrowing costs by rapidly raising interest rates to curb some lending, consumer spending, business investment and labor demand.

Despite various challenges, the most optimistic market participants predict that employers, workers and consumers may experience a so-called “soft landing” this year, with the Fed increasing borrowing costs and helping inflation and wage growth slow without a painful slowdown killing. recovery: Morgan Stanley strategists, for example, expect real wages to be generally positive by the middle of the year, exceeding price increases as inflation declines and wage rates maintain some strength. It could also be a blessing for the stocks.

“It’s possible that the job market will continue to be tight over the next few quarters despite the Fed increase,” said Andrew Flowers, a labor economist at Appcast, a technology firm that helps companies target recruitment ads. He still sees an “overwhelming appetite” for hiring.

Although particularly low unemployment is not typically a bullish sign for equities, some of the recent years have counteracted the trend. By 2019, when the S&P 500 returned around 30 percent, unemployment had fallen to 3.6 percent by the end of the year, in line with current levels.

In such an uncertain environment, forecasts of how the stocks will perform by the end of the year vary widely among the best Wall Street companies. With several technical measures, the market’s trajectory is currently close to “make or break” levels.

Public companies have “become hugely efficient, so based on an operating profit, they have been able to bear these extra costs,” said Brian Belski, Chief Investment Officer at BMO Capital Markets. The outlook from Mr Belski’s bank is among the most convinced, with a call for the S&P 500 index to close in 2022 at 5,300 – 23 percent over Monday’s closing and well above most estimates.

“Ultimately, I think it’s good for the economy that we see that kind of wages,” he said. “Never bet against the American consumer, ever.”

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