The Dow Jones Industrial Average, along with just about any other indice globally has had a very interesting year. Following the Chinese market crash on the first day of trading in the year, stocks were down in a big way. However, in mid-February, we started to see signs that markets were attempting to recover. However, it’s my opinion that the recovery for the Dow Jones and other US indices is likely to take a big hit in the coming weeks. That opinion is built around the US jobs report that was released on Friday. Today, we’ll talk about what we saw from the jobs report, how it’s likely to affect the Dow Jones Industrial Average, and what we can expect to see moving forward. So, let’s get right to it…

The US Jobs Report Seemed Great: Keyword “Seemed”

As mentioned above, the US jobs report, also known as the Non-Farms Payrolls report was released on Friday. At first glance, things seemed great. In the month of February, analysts expected that the United States economy would add 190,000 jobs, but the actual number came in well higher. In fact, in the month, 242,000 jobs were added to the economy. This not only beat expectations, but it blew away the key number at which the US economy is considered to be doing well, 200,000. However, when you look into the details of the report, things aren’t quite as good as they seem.

The US jobs report gives us several different data points. Jobs growth is important, but so is wage growth, sector growth, unemployment rates, and more. All of this data is offered in the report. One piece of data from the February report was overwhelmingly concerning. In the month of February, average hourly wages unexpectedly fell! In the month, economists were expecting that the average hourly wage would rise by 0.2%. However, in the month, this figure actually fell by 0.1%.

What This Means For The Dow Jones Industrial Average

On Friday, when the report was released, investors rejoiced and the Dow climbed in a big way, breaking the 1,700 mark. However, we’ve seen this in the past. Negative reports have been camouflaged behind positive data. So, gains start, leading to declines. The truth is, that on Friday, investors were blinded by the big 242,000 number, leading to the gains. However, over the weekend, excitement will calm and blindfolds will fall. Investors are likely to start doing further research and finding that the report wasn’t as good as they thought. The reality is that when hourly wages fall, consumers don’t have as much money to spend. As they start to spend less, prices will eventually need to fall in order to increase demand. This is a classic early sign of a recession to come, and investors know it. So, I’m expecting that over the next few days, we’re going to start seeing big declines in the Dow as a result of the news.