Average Hourly Earnings: If average hourly earnings are increasing, it could be interpreted as a sign of a strong job market and potential inflationary pressures. While higher earnings are positive for individuals, excessive wage growth might lead to concerns about rising costs for companies, impacting their profit margins. This can be viewed as bearish for stocks, especially if it raises inflation fears.
Federal Reserve and Inflation: The Federal Reserve's actions to address inflation, such as adjusting interest rates, can impact stock markets. Tightening monetary policy to combat inflation might be perceived as bearish for stocks because higher interest rates can increase borrowing costs for businesses and consumers.
Unemployment Rate: A decrease in unemployment can be seen as positive for the economy and the stock market, indicating a healthy job market. However, if there are concerns that the economy is overheating, it might lead to worries about higher inflation and a more aggressive stance by the Federal Reserve, potentially affecting stock prices negatively.
Stock Valuations: If stocks are perceived as overvalued, any signs of economic weakness or uncertainty can lead to bearish sentiment. Investors may become more cautious, and stock prices could decline.
Currency Movements (USD/JPY): Changes in currency values, like the USD/JPY pair, can impact various aspects of the economy. A weaker USD might benefit U.S. exporters but could also contribute to inflationary pressures. The decision by the Bank of Japan to end negative rates could influence the USD/JPY exchange rate, and undervaluation or overvaluation depends on various economic factors.
