How a strong jobs market has kept the stock rally going

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In this episode of Stocks In Translation, Yahoo Finance’s markets and data editor Jared Blikre and senior reporter Alexandra Canal welcome Callie Cox, strategist at Ritholtz Wealth Management, to the podcast.

The team explores market resiliency—the ability to endure and recover quickly from challenges like economic downturns or financial crises while maintaining stability.

Cox reflects on the recent market trends amid seasonality and rotation, saying, “It’s been a pretty smooth ride this October, which is not something I expected,” said Cox. “When it gets this quiet, everybody’s asking, what’s the next shoe that’ll drop?… So, I’m enjoying the quiet… but I’m trying to dig to [see] what’s happening underneath.”

Cox credits the current market resilience to the strength of the job market. “The job market was incredibly strong in 2022, 2023,” she continued. “The fact that unemployment has been so low, wage gains have been so strong. Even as inflation has come under control, everything’s just become more affordable. And we’ve all stayed employed during the process. That is a rarity in history.”

The conversation then shifts to the second half of the Fed’s dual mandate: stable prices (i.e., inflation). (The Fed’s dual mandate is to achieve maximum employment and stable prices, i.e., inflation). “That means prices are going to grow, but hopefully, our paychecks grow with them. So things remain affordable… That’s something that people forget a lot. The fact that inflation doesn’t heal itself through lower prices, it’s actually higher prices that become more affordable as you examine your budget.”

Cox also explains the red flag that comes with deflation: “If you’re seeing prices fall, that is not a good thing. That means there’s something nefarious happening in the economy, and chances are there’s going to be massive job loss around the corner,” said Cox.

Twice a week, Stocks In Translation cuts through the market mayhem, noisy numbers and hyperbole to give you the information you need to make the right trade for your portfolio. You can find more episodes here, or watch on your favorite streaming service.

This post was written by John Tejada.