Job Gains Send Markets Plunging: Clinton Hails Surge, but Stocks Fall
An unexpected surge in employment last month paradoxically sent the stock and bond markets into a tailspin yesterday, as traders pushed aside the good news and focused instead on the likelihood that a stronger economy could mean higher interest rates.</br></br>The wild day in the markets began when the Labor Department said that employers added 705,000 workers to their payrolls in February, the largest one-month gain in jobs since 1983. In addition, the nationÛªs unemployment rate dropped to 5.5 percent from 5.8 percent.</br></br>President Clinton seized on the good news, which pushed him over the top of the 8 million jobs he promised the economy would create during his four-year term. ÛÏIt is a tribute to the hard work and the ingenuity of the American people and to our uncommon partnership that we announce officially today that the United States economy has created 8.4 million jobs in three years, and I am very proud of that,Û Clinton said in a campaign stop in California.</br></br>differently. In a flash, expectations of slow growth, worry about the possibility of a recession and anticipation of more cuts in short-term interest ratcå¤ by the Federal Reserve were replaced by visions of an economy swiftly gaining upward momentum.</br></br>That new sense of a much stronger economic outlook caused interest rates to soar, analysts said, because investors decided that the demand for credit is likely to rise, the Fed is not likely to cut short-term rates again soon and faster growth might make inflation somewhat worse.