Stock market outlook: Volatility in store after strong jobs report

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Stocks are set for more volatility as the 'unlucky 13' months of strong job growth complicates the Fed's mission to cool the economy

The jobs report also ignited a sell-off in US bonds as investors stepped back somewhat from the broad view that rate cuts may start as early as July. Treasury yields climbed in the sell-off, propelling theStocks rallied Friday, but don't count on them to maintain momentum over the medium term, Ed Moya, senior market analyst at Oanda, told Insider.

"We're still looking at a much weaker economy going forward and banking problems are not going away," he said.potential June 1 deadline"This is a market that's really going to struggle. The Fed knows the lag in monetary policy will eventually be felt," Moya said. The Fed in the coming week will have a fresh read on inflation from the April report on the Consumer Price Index."This week is a reminder that markets do not move in a straight line, and the underlying pessimism of institutional investors will continue to cause a zig-zag pattern for equities," wrote Mark Hackett, Nationwide's chief of investment research, in a note.

Boussour at EY-Parthenon said policymakers at the Fed will tread carefully as they need to assess"volatile" labor market and inflation data alongside the implications of ongoing tension in the banking system. The Fed"will maintain a hawkish tilt," she wrote."It's too early to assess the likelihood of an additional Fed rate hike in mid-June, but this latest jobs report will push the excessively data-dependent Fed towards further tightening – a mistake in our view." Bespoke Investment Group

 

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