SPY, TLT Wobble on Weak Jobs Data, Rate-Cut Fears
February’s jobs report was neither a disaster nor a triumph, leaving popular ETFs mixed as investors eye the Fed’s next move.
This week’s nonfarm payrolls report offered little relief to investors already on edge about the economy. According to the Bureau of Labor Statistics, U.S. employers added 151,000 jobs in February, short of the 160,000 economists had expected. Meanwhile, the unemployment rate ticked up to 4.1% from 4%.
The report wasn’t catastrophic, but it was hardly reassuring either. And with the Trump administration’s trade war likely to weigh on economic growth, the lukewarm labor data isn’t instilling confidence. February’s job gains follow a downward revision of January’s numbers to 125,000 from the originally reported 143,000.
Stocks Mixed After Jobs Report
Markets reacted with mixed signals. The SPDR S&P 500 ETF Trust (SPY) swung between gains and losses throughout the morning, having already dropped 6.6% from its Feb. 19 peak, with much of those losses occurring this week. Meanwhile, the Invesco QQQ Trust (QQQ) fell 9.5% in the same period, teetering on the edge of correction territory.
On the flip side, bond yields dipped, reflecting rising expectations for the Federal Reserve cut rates later this year. The 10-year and 30-year Treasury bond yields declined five basis points (0.05%) and two basis points (0.02%), respectively. The iShares 20+ Year Treasury Bond ETF (TLT) responded with modest gains, pushing its year-to-date return close to 5%.
A Resilient but Fragile Labor Market
Despite concerns over economic headwinds, the labor market remains relatively stable. While there have been rising layoffs and unemployment claims, particularly in the government sector, where cost-cutting measures are taking hold, February’s job growth is only slightly below the 2024 monthly average of 168,000 jobs.
However, markets are forward-looking, and the longer trade tensions persist, the greater the risk to economic stability.
The Fed’s next monetary policy decision on March 19 is fast approaching. Futures markets currently anticipate the central bank will hold rates steady at this meeting but may consider cuts in May if economic conditions deteriorate further.
For now, investors are watching closely. Any fresh economic data suggesting a sharper slowdown could force the Fed’s hand—just not yet.
