Two days into his appointment as new Federal Reserve chairman, Ben Bernanke has to contemplate continuing its tightening campaign. Reuters reports the latest US productivity and employment indicators:
The Labor Department said nonfarm business productivity fell at a 0.6 percent annual rate in the fourth quarter, marking the first decline since the first quarter of 2001. That pushed unit labor costs up at a 3.5 percent pace -- the fastest growth in a year and well above market expectations...
New claims for U.S. unemployment benefits fell unexpectedly to 273,000 last week from 284,000 the prior week, pushing a four-week average of claims to the lowest level in nearly six years. Wall Street had expected claims to rise to 295,000.
Investors didn't like the data, as Reuters also reports
U.S. stocks fell sharply on Thursday amid concern that a weaker U.S. productivity report would spur the Federal Reserve to extend its campaign of interest-rate increases...
The Dow Jones industrial average was down 98.69 points, or 0.90 percent, at 10,855.26. The Standard & Poor's 500 Index was down 11.61 points, or 0.91 percent, at 1,270.85. The Nasdaq Composite Index was down 26.92 points, or 1.17 percent, at 2,283.64.
Many investors have assumed that stocks would go up once the Fed stops raising interest rates -- a dubious assumption in itself. But now, they have to confront the possibility that the rate hikes themselves are not quite near an end.